Category: Serbia

The new Rulebook on the Content of the Business Entities Register and Documents Required for Registration (RS Official Gazette No. 63/23) (hereinafter: “New Rulebook”) has entered into force on August 5, 2023, thereby ceasing to be valid Rulebook on the Content of the Business Entities Register and Documents Required for Registration (RS Official Gazette, No. 42/2016) (hereinafter: “Previous Rulebook”).

As the previous one, the New Rulebook regulates the content of the Business Entities Register (hereinafter: “Register”) and the documentation required for registration. However, their content is not fundamentally different.

Namely, the New Rulebook is aligned with the planned digitization of public administration and the latest amendments to the Law on Registration Procedure in the Business Registers Agency, as well as the recent implementation of electronic incorporation of companies. In addition, the New Rulebook conducted terminology and minor material harmonization with the Companies Act.

Relevant changes to the New Rulebook are primarily reflected in the Register’s content: it must contain an address for receiving electronic mail, and depending on the type of subject of registration, it will also contain restrictions to representatives’ authorities in the form of a mandatory co-signature, telephone numbers or registration numbers assigned by other authorities (on the contrary, so far the registration numbers assigned by the Pension and Disability Insurance Fund and the Health Insurance Fund were mandatory).

For the registration of entering of in-kind contributions, already subscribed or at the same time as the company incorporation or share capital increase, from now on it is necessary to submit a shareholders’ or legal representatives’ statement that the in-kind contribution has been entered into the company. Exceptionally, if the value of the in-kind contribution was determined by an assessment and if more than one year has passed since the day of registration of the company incorporation or share capital increase, a new assessment of the in-kind contribution value has to be submitted.

Additional protection of the rights of dissenting stockholders, i.e. dissenting shareholders, is foreseen in the obligation to submit a statement from the competent company body that all its obligations in connection with the purchase of shares/stocks of dissenting shareholders/ stockholders have been fulfilled in accordance with the law, or that there were none, all in following cases of registration: change in the duration of the company, amendment of the articles of association of a joint stock company which reduces the rights of stockholders of common and preferred stocks established by law, decision to withdraw stocks from the regulated market, as well as in the case of legal form changes or status changes to a limited liability company and joint stock company.

Furthermore, the New Rulebook in particular stipulates the documentation required for the registration of a shareholder due to withdrawal without claiming a fee for the share (statement of the shareholder’s withdrawal and proof that it was received by the company), withdrawal with a fee for the share (company’s decision to approve the shareholder’s request for withdrawal ), as well as the expulsion of a shareholder due to non-fulfillment of obligations towards the company for payment, i.e. entry of contributions or additional payments (company’s decision on expulsion of the shareholder and proof that the he accepted the unfulfilled obligation).

In case of registration of a data change on registered persons, the Previous Rulebook required a document that represents the legal basis thereof, which was individualized throughout practice, while the New Rulebook only further stipulates the type of document depending on the type of person whose data change is being registered. Thus, for example, for foreign companies an extract from the competent register is submitted, or another document confirming its identity and the relevant change, with a certified translation into Serbian.

One of the few reliefs brought by the New Rulebook is for the registration of a share capital increase by converting a claim of a creditor (who is not a company’s shareholder) into share capital. Namely, the Previous Rulebook stipulated that, along with other documentation, it is necessary to submit the agreement on the accession of a new shareholder with certified signatures of all shareholders of the company and the joining creditor, while the New Rulebook stipulates that the same agreement is being submitted with certified signatures of the authorized person and the joining creditor. The same provision is provided in the case of a share capital increase with new contributions by a joining shareholder.

The New Rulebook introduces two additional documents needed for a status change of a limited liability company and a joint stock company, namely the above-mentioned statement for the protection of dissenting stakeholders/shareholders, as well as a statement by the competent company body that each stakeholder/shareholder of the transferor company, except for those who exercise their right to payment instead of the acquisition of stakes/shares in the acquiring company, agreed to the exchange of stakes/shares in a different proportion, if carried out as such.

Application for registration of the suspension of the liquidation procedure is followed only by the decision on the suspension of the liquidation, but not the decision on the appointment of a legal representative, which was foreseen by the Previous Rulebook.

Addition in comparison to the Previous Rulebook is the list of documents required for the registration of ownership change after the sale of the bankruptcy debtor as a legal entity, namely: the court decision on the suspension of bankruptcy proceedings, the share purchase agreement, the decision on the appointment of a legal representative of the company, as well as the decision on legal form change if it occurs with the corresponding proof from the Central securities depository and clearing house.

Finally, in accordance with the current trend of public administration digitalization, the New Rulebook emphasizes that when the registration procedure is initiated by submitting an electronic application, the electronic application contains all the data prescribed by the said rulebook, and submitted with are electronic documents in accordance with the law.

It seems that the aforementioned changes additionally emphasize the responsibility of the competent company bodies by issuing statements when protecting the rights of dissenting stakeholders/shareholders, entering of in-kind contributions, exchanging stakes/shares in a different proportion during a status changes, etc. Question remains whether they will truly be beneficial or remain an additional bureaucratic burden.

By Katarina Milic, Senior Associate, JPM & Partners

In the ever-evolving world of technology, the boundaries of law are constantly being tested. With the most recent developments in generative AI (artificial intelligence – language and diffusion models), the boundaries of IP law are being tested to their absolute limits. A recent ruling by the United States District Court has brought to light a significant issue that could have implications everywhere in the world, across the spectrum of creative and knowledge industries.

The US Ruling on AI-Generated Art

A landmark decision by United States District Court Judge Beryl A. Howell (Stephen Thaler v. the United States Copyright Office, Case No. 22-1564 (BAH)) stated that art entirely generated by artificial intelligence cannot be copyright protected. This ruling has sent ripples across the tech industry, particularly affecting AI startups like Midjourney and Runway. The decision specifically targets works that are solely generated by AI, leaving some ambiguity for artworks created collaboratively by humans and AI models.

The main criterion in the judgment is the assertion that copyright law sits on the “bedrock” of human creativity. But these models are human-made: they are pre-trained by humans, they use media and texts previously created by humans, and they require human input for the generation of materials. So, the lines still seem too blurry for any meaningful legal predictability.

TV and Movie Production

Following recent strikes by screenwriters and actors in the US, concerns have been raised about the possibility of AI taking their jobs. While this is a reasonable initial risk, this judgment seems to block copyright protection in terms of fully AI-generated TV shows and other works. This limits the business models relying on such creations. Yet, other countries have not provided a clear response to this issue, apart from Ukraine. This country has established a “neighbouring” right for works created independently by AI and offers 25 years of protection to creators.

How will we classify the TV shows created collaboratively by humans and AI models? The usual lawyers respond: “This remains to be seen”.

Potential Impact on Copyright Laws in South-East Europe 

For creatives in South-East Europe (i.e., Albania, Bosnia and Herzegovina, Croatia, Montenegro, North Macedonia, Serbia and Slovenia), this ruling could either serve as guidelines or as an opportunity for outposts of global studios in this region to benefit from local copyright laws, which may appear more predictable at the moment. Either way, many ways in which the US legal system is distinct from that of continental Europe, will make international copyright treaties more relevant, especially given the global reach of the tech industry.

In the South-East European context, where many startups are integrating AI into their operations, understanding the nuances of copyright law becomes crucial. If AI-generated art cannot be copyright protected, it raises questions about the ownership, commercial rights, and potential infringements related to such works.

Have you considered the possibility of someone copying an image or video created by your AI model, and whether you have the legal right to prevent it? It’s worth considering.

What This Means for Creatives in the Region

Food for thought:

1. Re-evaluation of Intellectual Property (IP) Assets: Companies that rely heavily on AI-generated content might need to reassess the value of their IP assets. Without copyright protection, the commercial value of AI-generated art could diminish.
2. Collaborative Artworks: The ruling leaves room for interpretation when it comes to artworks created by both humans and AI. Creatives in this region might explore this avenue more, blending human creativity with AI capabilities.
3. Legal Preparedness: It’s essential for all companies, especially startups in the region, to stay updated with global legal trends related to AI and copyright. Engaging with legal experts who understand the intricacies of both tech and IP law will be crucial.

The intersection of AI and copyright law is a complex one, and the recent US court ruling has added another layer of complexity. For many startups and corporations in South-East Europe, staying informed and prepared is the key. As AI continues to shape various industries, understanding its legal implications will be paramount.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Rastko Petakovic, Senior Partner and Nikola Kliska, Senior Associate, Karanovic & Partners

NKO Partners has advised the Belgrade-based PGM Live TV production and distribution company on its acquisition of the remaining 50% stake in VPK Balkan from Slovenian production company VPK PRO, thus gaining full ownership of the target. Sole practitioner Nenad Davidovic advised the seller.

According to the firm, “the acquisition of VPK Balkan shares marks a significant milestone for PGM Live as it expands its presence and strengthens its position in the TV production and distribution industry. With the completion of this deal, PGM Live now possesses full ownership of VPK Balkan, allowing for increased control and strategic decision-making within the company.”

The NKO Partners team included Partner Djordje Nikolic and Senior Associate Srna Popovic.

Petar Orlic and Branko Jankovic of NKO Partners sat down with CEE Legal Matters to talk about their unique paths to Partnership at the firm and share insights. Petar, who recently made the transition from London to Serbia in pursuit of new opportunities, shares his excitement about the vibrant and energetic business climate in the CEE region, while Branko, who rapidly ascended to the position of Partner at NKO, offers valuable tips on professional growth and the importance of staying open-minded and continuously learning. 

CEELM: First of all, Petar, can you tell us what brought you to Serbia from London? 

Orlic: Opportunities. That’s what brought me to Serbia – and what NKO had to offer. 

I see Serbia and the whole CEE region as somewhere that offers many opportunities for business expansion and international trade. London, post Brexit, felt somewhat stagnant whereas Serbia feels vibrant and energetic. It is no coincidence that Serbia has attracted over EUR 42 billion of inward foreign direct investment since 2007. Since the implementation of key economic reforms, Serbia has grown into one of the premier investment locations in CEE and I want to take advantage of that! 

CEELM: Why did NKO make sense to set up shop over others? 

Orlic: NKO’s exceptional reputation and expertise in the legal industry were key. I have known the co-founders, Djordje Nikolic and Djuro Otasevic, for over 15 years. Indeed, NKO was my go-to firm for legal advice when I was a Partner in London at various international law firms, such as Paul Hastings, Reed Smith, and Watson, Farley & Williams. So I have seen, firsthand, the high-quality legal service that the NKO team provides. By joining NKO, I saw an opportunity to work with a team of highly skilled professionals who share a passion for delivering excellent legal solutions and building on that opportunity to establish itself as a leading law firm in both Serbia and Montenegro. 

CEELM: Bringing in your background, what are you focusing on next? 

Orlic: At NKO Partners, I’ve tried to bring in structures and systems that improve the workings of the firm. I like to see NKO as a local firm with international principles. Our main focus for the future is to continue delivering exceptional legal services whilst attracting more and more international clientele to its already impressive client list. By staying at the forefront of legal trends and continuously investing in our team’s professional development, we strive to maintain our position as a leading law firm. 

CEELM: What did you see on the ground that you would definitely not change? 

Orlic: Being on the ground out here there are a number of things that I am impressed with. In particular, the quality and knowledge of legal professionals. I mentioned this in my guest editorial with CEELM at the beginning of the year – the firms in the region are stepping up to the plate when it comes to delivering excellent legal advice. While it might be harder to discover and nurture talent, once settled in, I would say that lawyers who are successfully practicing law in the region today are doing so at a standard that definitely is on par with their colleagues in Western or international law firms. 

Additionally, the amount of, and pace at which reforms are being implemented in Serbia are also stellar. From what I have seen, Serbia is well and truly working on aligning its legal framework with EU standards. Long may this continue! 

CEELM: Branko, your story is one of unimpeded and continuous progress: you started your career with NKO only five years ago. What is the key to making Partner so quickly? 

Jankovic: I would say primarily hard work, as well as commitment to the clients and an open mind for constant learning from older and more experienced colleagues such as NKO Founding Partners Djordje Nikolic and Djuro Otasevic. Ever since my studies at the University of Belgrade’s Faculty of Law, it has been my experience that success comes to those who put in the hard work. I tended to keep the same mentality from the beginning of my career, and it has definitely paid off so far. 

CEELM: What made you stick with this team over others? And – on the flip side – what, if anything, would you change from your Junior Associate perspective? 

Jankovic: The people at NKO – working in an environment with like-minded individuals who are ambitious and success-driven but at the same time down-to-earth, sensible, and humane – was the key factor for me to stay with the firm. I feel privileged to be part of the NKO Partnership. Don’t get me wrong, sometimes it has been tough – working on some really demanding and complex transactions – but, again, the hard work has absolutely paid off. 

As for changes, honestly, I would not change anything significantly except for maybe using more opportunities in my off time for networking and connecting with my peers across the globe. This is something that I would like to refresh and intensify in the forthcoming period. 

CEELM: What facilitated your growth into your current role and what are the main tips you’d give to junior associates reading this? 

Jankovic: An open mind and constant striving to learn new things, hard work, as well as proper organization are the most important tips for any junior associate. It is also beneficial to properly understand your role throughout your career – naturally, young lawyers are building their experience by working on simpler legal matters at first, afterward slowly progressing to more complex tasks, whereas it is equally important to always keep the focus on a high level. Although it is not always easy to balance everything, especially at a younger age, having the right team around you definitely makes working a pleasant experience.

The European Union has initiated the world’s first carbon border tax, known as the Carbon Border Adjustment Mechanism (CBAM), in a strategic move to tackle the mounting concerns of climate change.

The CBAM is designed to level the competitive landscape, ensuring that EU companies, which are already bearing the cost of their carbon emissions, remain on equal footing with enterprises originating from nations with minimal or no carbon emission charges. While the Carbon Border Adjustment Mechanism stands as a significant development in the realm of climate policy, its ramifications extend beyond environmental considerations, reshaping the contours of international trade and the operational dynamics across industries.

For non-EU producers and importers, especially those from the Western Balkans – encompassing Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Kosovo, and Serbia – as well as trading heavyweights like Israel, Turkey, and Indonesia, this evolution presents both challenges and opportunities. Navigating this changing landscape demands that these nations and their businesses remain agile, informed, and forward-looking. The emerging complexities brought about by the CBAM underscore the necessity for these key global players to strategically align their practices, ensuring resilience and adaptability in this new era of trade and environmental stewardship.

The CBAM Framework: An Overview

The Carbon Border Adjustment Mechanism (CBAM) was introduced to tackle the challenge of carbon leakage – the shift of companies moving their production from the EU to countries with more lenient climate policies. The CBAM complements the European Union’s Emissions Trading System (EU ETS), both aiming to lower carbon emissions and position Europe as the first climate-neutral continent by 2050. As part of its “Fitfor55 Agenda“, the European Union has detailed plans for this mechanism.

The Implementing Regulation, published on August 17, 2023, sets the stage for a transitional period starting October 1, 2023.

During this time, importers will only have to report on the GHG emissions embedded in their imports without any financial adjustments. This approach offers businesses and other stakeholders the time to prepare for the full CBAM rollout in January 2026, allowing for fine-tuning of the definitive methodology. The new regulatory framework will have profound implications for non-EU producers and importers, particularly within the iron, steel, aluminum, cement, fertilizers, electricity, and hydrogen sectors – areas most vulnerable to carbon leakage.

The adoption of the Implementing Regulation is a significant step forward for the CBAM, as it brings the mechanism one step closer to implementation and provides much-needed clarity for businesses.

While this trial phase won’t directly tax importers based on the EU’s carbon price, those failing to meet reporting requirements will face fines. However, these penalty charges, ranging from €10 to €50 per tonne of unreported carbon emissions, have drawn criticism from EU industry executives. Some argue that the relatively lenient penalties and potential flexibility could pave the way for evasion.

Key Provisions for Non-EU Producers and Importers

• The first CBAM Report is due by January 31, 2024, covering goods imported in the last quarter of 2023.
• To streamline the reporting process, an electronic database will be established to collect the information reported during the transitional period. Initially, a CBAM Transitional Registry will be created, setting the foundation for the future CBAM Registry.
• Suppose a reporting declarant fails either to submit a CBAM Report or to amend a CBAM Report upon direction. In that case, the European Commission will levy a penalty between EUR 10 and EUR 50 for every tonne of unreported embedded GHG emissions.
• Implementing regulation is further detailed and expanded through the inclusion of nine annexes.

Business Implications for Non-EU Producers and Importers

• Penalties: Brussels has set penalties for the trial phase between €10 and €50 per tonne for missing carbon emission reports. Industry insiders have voiced concerns that these penalties might be too low, allowing businesses to sidestep reporting.
• Impact on Global Trade: The CBAM has ruffled feathers globally. Nations like India and Brazil argue it breaches World Trade Organization rules. Countries such as the US and South Africa fear their markets may be inundated by inexpensive imports from companies dodging the EU tax.
• Reporting Requirements: Importers of goods like #steel, #cement, #electricity, #hydrogen, #fertilizers, and #aluminum must submit their initial carbon emission reports by January 31, 2024.
• Revenue Projections: According to estimates from S&P Global analysts, the CBAM could generate approximately $80 billion annually for the EU by 2040.
• Feedback from Industry Stakeholders: Energy director at metals industry body Eurometaux, Adina Georgescu, warned of the regulation’s potential loopholes for importers. Furthermore, industry executives believe the EU member states have too much latitude in determining how to apply the CBAM measures. They advocate for CBAM penalties to mirror those of the EU’s Emissions Trading System (ETS), currently set at €100 per tonne for unreported emissions.

Looking Ahead

Understanding the CBAM and its business implications is vital for non-EU companies striving for market compatibility in Europe. More than just regulatory compliance, this represents a shift towards global sustainability and new market dynamics.

The European Commission contends that the CBAM will prompt other countries to institute their own emissions trading systems. Recent announcements from Turkey and Indonesia about introducing a carbon price validate this claim.

Conclusion

The CBAM, with its potential for shaping international business and trade, signifies the EU’s proactive approach to carbon emissions. The European Union is leveraging the ‘Brussels Effect,’ banking on the idea that the CBAM might become the golden standard in ESG, GHG, and climate regulation, much like the impact GDPR previously had on global data protection standards. Through the Brussels Effect, the EU anticipates that regulated entities, especially corporations, will align with EU laws even outside its borders, creating a ripple effect that prioritizes sustainability across the global marketplace.

However, achieving this vision may not be straightforward. The EU’s trading partners have already voiced concerns, labeling the proposed carbon border tax as protectionist and potentially detrimental to export industries. These criticisms, coupled with pending WTO challenges and other bureaucratic obstacles, mean the EU’s ambitious plan faces an uncertain road ahead. Whether the CBAM will stand firm against these challenges and truly transform global trade standards remains to be seen.

In light of these dynamics, it is crucial for non-EU producers and importers to remain agile, informed, and prepared. As the landscape evolves, they must adapt and prepare for a future where sustainability isn’t just a choice but might become the norm in international trade.

By Bogdan Gecic, Founding Partner, Gecic Law

On 03 August 2023, the Government of the Republic of Serbia passed on a new Proposal of the Law on the Management of Companies Owned by the Republic of Serbia (hereinafter referred to as: “Proposal“). 

At the end of May, the Government of the Republic of Serbia already passed a proposal for this law, which was already in the parliamentary procedure but was withdrawn, and public consultations were organized in order to reject doubts that this law aims to implement the privatization of public companies.

The proposal stipulates that it applies to “companies of capital” i.e., companies in the form of limited liability company or joint-stock company in which the Republic of Serbia owns more than 50% of the company’s share capital. The two biggest goals are presented within the Proposal: 1) establishment of corporate governance and 2) centralized ownership. According to the available data (Electronic records of economic entities in which the Republic of Serbia has ownership – website of the Business Registers Agency), on 9 May 2023, the Republic of Serbia has 305 economic entities in its portfolio from which 266 are active and 23 are in the form of public enterprise.

Within the proposal, the Government has stated reasons for the implementation of the Proposal stating: “In the existing legal framework, the state’s ability to provide a unique strategic direction and goals of companies based on knowledge of their business and results is very difficult. Objectives of management have not been clearly defined yet but are determined based on law and strategic documents, which are often in conflict with each other.”. The solution is found in the introduction of corporate governance which is motivated by the intention to increase the level of efficiency, effectiveness, and transparency of the business of companies. Bearing in mind the Code of Corporative Governance of the Chamber of Commerce of Serbia, corporate governance enables a company to attract human and financial capital, effectively manage the business and ensure long-term and sustainable development, taking into account the interests of the owners and the interests of other parties who have legitimate interests in the company’s operations with benefits such as better performance, easier access to capital markets, more favorable conditions for raising new capital and better reputation.

One of the perceived shortcomings is the uneven legal framework for entities that are owned by the Republic of Serbia and the non-compliance of the legislative framework, above all the Law on Public Enterprises (“Off. Herald of RS “, no. 15/2016 and 88/2019) and Law on Companies (“Off. Herald of RS”, Nos. 36/2011, 99/2011, 83/2014 – other law, 5/2015, 44/2018, 95/2018, 91/2019 and 109/2021). The identified problems such as supervision of companies, monitoring of their performance, as well as the lack of consistent strategic direction and control, are expected to be overcome by centralized ownership – unification of responsibilities and competencies into one authority – The Ministry of Economy (hereinafter referred to as: “Ministry”). Every year, no later than September 1 of the current year, the Ministry will determine the general annual goals of capital companies through annual guidelines for management. For this special purpose, a commission will be formed from the representatives of the Ministry. In addition, companies of capital will submit to the Ministry: a medium-term business plan; annual business plan; periodic report on operations and other data on business, as needed. Centralized ownership management is expected to reduce management costs and increase the long-term contribution and value of the company of capital, all with the aim of preserving national and strategic interests.

The companies in the (>50%) ownership of the Republic of Serbia, shall either have one-tier for smaller companies of capital or two-tier management for larger companies of capital. Representatives and directors of companies of capital will have to take a corporate governance exam organized by the Chamber of Commerce of Serbia and receive a certificate on the passed exam from Ministry which will, besides required higher education and experience, ensure their competence for the job at hand.

One of the biggest changes the Proposal suggest is that, if adopted, it is expected for over 20 public enterprises to change their legal form from public enterprises to either limited liability companies or joint-stock companies no later than one year from the date of commencement of application of this law. Some of the public enterprises that could be expected to change their legal form are Službeni Glasnik, Pošta Srbije, Srbijašume, Srbijagas, Jugoimport SDPR and others. Subsequently, the implementation of this Law opens the possibility of the privatization of these, until now, publicly owned enterprises.

Regarding public enterprises, when changing the legal form, the share capital of a public enterprise shall be converted into shares, i.e. stocks, depending on the legal form of a company. When implementing a change of legal form, the legal subjectivity and business identity of a public enterprise is retained without liquidation, cessation of business or interruption of legal continuity, retaining its own identity in both legal and business sense. The government shall pass an act on the criteria for choosing the legal form of a company into which the public enterprise will be transformed (limited liability company or joint-stock company).

In the Proposal’s elaboration, it is stated that in June 2021, the Government adopted the action plan for the period from 2021 to 2023, for the implementation of the Strategy of State Ownership and Management of Business Entities from 2021 to 2027, as a public policy document adopted with the aim to implement the goals of the Strategy. Therefore, the Proposal is made in accordance with defined goals, activities, and measures in the mentioned documents. In addition to the above, in the conclusion rendered by the Government from June 2022, the text of the Statement on the program was adopted, which accepts the revised objectives of the economic policy measure during the duration of the program supported by the Policy Coordination Instrument agreed with the International Monetary Fund, where the Republic of Serbia undertook to adopt a new law on the management of the enterprises owned by the state.

Nevertheless, the Republic of Serbia would not be a lonely country in the region to adopt such a law. In previous years, Slovenia, Croatia and Hungary have all made progress in establishing more rational, responsible and professional management of the companies owned by the state.

The question remains how the mentioned measures will advance the development of the so-called companies of capital and in what way will the authority contribute to the improvement of professional and responsible ownership management thereof, which will effectively and in the long run protect and maintain the value of the portfolio of the Republic of Serbia.

By Zivko Simijonovic, Senior Associate, and  Stasa Kneselac, Associate, JPM & Partners

Amendments to the Law on Foreigners (Official Gazette of RS no. 24/2018, 31/2019 and 62/2023) and the Law on Employment of Foreigners (Official Gazette of RS no. 128/2014, 113/2017, 50/2018, 31/2019 and 62/2023) (“the Laws”) were published in the Official Gazette of the Republic of Serbia no. 62/2023 of July 27, 2023, and entered into force on August 4, 2023.

Certain amendments to the Laws started to apply on the day of entry into force, however the application of most provisions referring to facilitating, i.e., simplifying the procedure of issuance of certificates and permits to foreigners is delayed until February 1, 2024, i.e., until the adoption of related by-laws and fulfilment of necessary material and technical requirements.

As already noted, the main objective of the amendments to the Laws is to digitalize administrative procedures pertaining to the regulation of status of foreigners in the Republic of Serbia, as well as to liberalize the procedure of their employment.

The key novelties shall be presented below:

1. Unified permit for temporary residence and work of a foreigner

The amendments to the Laws established a unified procedure for issuance of the temporary residence and work permit to foreigners.

Namely, a foreigner shall be issued a unified permit for temporary residence and work, in a proceeding conducted before the Ministry of Interior of the Republic of Serbia, which also involves the participation of National Employment Service (“NES”), which authority shall inspect the fulfilment of requirements for employment.

The subject procedure is conducted electronically, i.e., the request is filed through a unified web portal (“Unified Portal”) and supported by all necessary evidence in the same manner, i.e., electronically. The unified permit is issued as biometric document (instead of previously used sticker in foreigner’s passport) and it may be approved for a period of three years (with possibility of extension).

The application for conducting a labour market test is also submitted through the Unified Portal, which test is conducted upon employer’s request by the competent organisational unit of NES, in legally prescribed cases.

In addition to the foreigner, the request for issuance of the unified permit may also be submitted by the employer (on behalf of the foreigner), or a person authorised by them. The competent authority shall decide on the filed request within 15 days from the submission of the proper request.

For certain categories of foreigners (a foreigner whose immediate family member is citizen of the Republic of Serbia and a foreigner establishing employment), the procedure of obtaining unified permit is additionally facilitated, as they do not need to provide the proof of subsistence or health insurance when filing the request.

During the validity of the unified permit, a foreigner and/or employer on behalf of the foreigner (or natural and/or legal person authorised by them) may file a request for change of the basis of work or employer, or for employment with two or more employers – also electronically, i.e., through the Unified Portal. This request shall also be decided upon by the local NES unit, within 10 days after the receipt of the proper request, while the approval shall be delivered to the applicant in the same manner, i.e., through the Unified Portal.

2. Validity and extension of the temporary residence permit

Regardless of the legal basis upon which it is being granted, temporary residence may be approved for a duration of up to three years (instead of one year, as it was prescribed before) and it may be extended for the same period, depending on the grounds on which it is approved in every single case.

In addition, the deadline for filing the request for extension of temporary residence permit is also lengthened, hence it may be filed no earlier than three months and no later than the expiry of the period of validity of the unified permit (instead of previously prescribed obligation to file the request no later than 30 days before the expiry of the current temporary residence permit).

The foreigner shall be obliged, within 30 days from the day of termination of employment contract or another contract whereby they exercised work-based rights outside employment, to conclude a new contract (employment or other appropriate contract), otherwise they shall be subject to legal requirements for entry, movement, stay and return of foreigners. In other words, the foreigner shall not automatically lose the right to stay and work in the Republic of Serbia on the day of termination of work engagement based on which the necessary permits have been initially provided, but rather get an opportunity to find another employment in the stated period and thus maintain their status, i.e., permits.

3. Right to work without work permit

It has been further specified in which cases a foreigner may perform work in the Republic of Serbia without the unified permit (e.g., foreigners whose temporary stay was granted on the basis of family unification with a citizen of the Republic of Serbia or with a foreigner who has been granted permanent residence, on the basis of ownership over real estate, humanitarian stay, scientific and research work, volunteering etc.).

4. Permanent residence

Permanent residence in the Republic of Serbia may be granted after three years of continuous residing in the territory of the Republic of Serbia (instead of five years, as it was prescribed before).

The request for approval of permanent residence is also submitted through the Unified Portal, whereas foreigners who have been granted permanent residence shall be entitled to work in the Republic of Serbia without the issuance of the unified permit.

In addition, there is a separate basis for granting permanent residence – Serbian origin, based on which a foreigner may be granted permanent residence regardless of the length of stay in the territory of the Republic of Serbia.

5. Visa D

Work engagement in the Republic of Serbia has also been facilitated for foreigners possessing long-term visa (so-called visa D) issued based on employment, as the stated visa, in addition to approval for residence, also represents the work permit – naturally, for the period of its validity (maximum 180 days).

The request for this visa is filed personally, also in electronic form, no earlier than three months before the intended arrival to the Republic of Serbia.

6. Other novelties

In addition, the assessment procedure conducted by the NES to check the fulfilment of requirements for foreigners’ employment, special cases of foreigners’ employment and self-employment is also regulated. As for the seconded employees and cases of intercompany mobility, it is prescribed that the respective assessment shall be done for a period of up to three years, with possibility of extension also by up to three years (whereas before the adoption of these amendments, work permit for seconded employees and cases of intercompany mobility could be issued for a period of up to one year and extended for maximum two years).

The obligation to keep evidence on fulfilment of requirements for employment of foreigners in business premises where the foreigner works has been abolished, wherefore the employers may keep these documents according to their organisational capacities and needs.

Also, fines for non-compliance with the legal provisions have been increased.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Lara Maksimovic, Senior Associate, and Danica Nikitovic, Junior Associate, PR Legal

The Serbian National Assembly adopted amendments to two key laws regulating the immigration status of foreigners in the Republic of Serbia – the Law on Foreigners and the Law on Employment of Foreigners.

The amendments aim to simplify and streamline the process of obtaining residence and work permits for foreigners by introducing a unified permit that will cover both aspects of a foreigner’s status in Serbia.

Also, additional tweaks and improvements were made to make the process more flexible and less time-consuming, while also allowing foreigners to obtain permanent residency much sooner (e.g. prerequisite of residency was reduced from five to three years).

These changes were, however, tempered with increased monetary fines for breaches of the underlying laws.

Unified permit for foreigners – as of February 2024

The key concept surrounding the two amendments is the introduction of a unified procedure that results in issuing of a unified permit that replaces what were previously residence and work permits.

• Fully electronic applications – the unified procedure can only be initiated by an electronic application at the web portal. All evidence regarding the application must be presented in electronic form. The application includes a filing of a request for the labour market test (which still remains a necessary prerequisite before a foreigner can be allowed employment).
• Deadline for issuing the unified permit – 15 days as of receiving a complete application.
• Biometric ID document – the unified permit will be issued in the form of a biometric document, with personalized data (photograph, fingerprints and signature). This will also enable foreigners to exercise some other rights more easily (such as obtaining an electronic certificate, i.e. electronic signature).

The foreigner must personally receive the biometric ID document.

• Extended duration for the unified permit – the unified permit and temporary residence permit can be issued for a period of up to three years (instead of one year period under the previous regime).
• Easier process of changing the employer or basis of employment under a unified permit – during the term of the unified permit, an electronic request can be made via the unified portal to amend the employer or basis for employment, whereas the organizational unit of the National Employment Service must decide on this request within 10 days by issuing an approval via the unified portal. After receiving the approval, the employee can immediately start working in line therewith.
• Suspended application – all provisions regulating the online-based unified procedure are set to come into force on 1 February 2024, which means that the current procedure of filing two separate requests for a residence and work permit will continue to apply until said date.

Amendments with immediate effect 

• Prolonged deadline for renewing existing residence permit – foreigners currently residing in Serbia will be pleased to hear that the request for renewal of residence can be submitted until the expiration date of the previously valid permit (previously, the deadline is 30 days before the expiry of residence permit).
• Statutory possibility for extended duration of temporary residence permits – in line with the amendments, the Foreigners Administration has legal grounds to issue/renew temporary residence permit for a period up to three years (instead of one year period under the previous regime). However, it remains unclear whether this option will be used prior to the introduction of the new unified permit system in February 2024 due to potential administrative challenges.
• Grace period for finding new employment – foreigners are granted a grace period to continue their stay in Serbia 30 days after the termination of their employment for which they received a work and residence permit (i.e. unified permit after February 2024), during which period they are given an opportunity to enter into new employment and apply for a new work permit (i.e. unified permit) to legally be allowed to work.
• Minor reduction of documents needed for a residence permit – proof of financial means for subsistence and proof of health insurance do not have to be submitted in the process of obtaining the residence permit procedure for:

(i) a member of the immediate family of a citizen of the Republic of Serbia;

(ii) a foreigner who is being employed in Serbia; and

(iii) immediate family members of a foreigner who is being employed in Serbia.

• Reducing the conditions for permanent residency – a total of three years of temporary residency is needed for a foreigner to apply for permanent residency (reduced from five years under the previous regime).
• Amendments regarding the seconded employees and intercompany mobility – the conditions for obtaining work permits for seconded employees and intercompany mobility are amended, primarily by specifying more detailed requirements of the secondment acts by which the persons are assigned to Serbia.
• Minimal local labour rights guaranteed to seconded employees – the laws expressly guarantee that seconded employees cannot be afforded fewer rights than is guaranteed under the Labour Law of Serbia with regards to key employment terms (minimum salary, working hours, annual vacations, health and safety, etc).
• Higher fines – proscribed fines are increased for breaches of the Law on Foreigners and Law on Employment of Foreigners.

As a rule of thumb, the minimum fine range under the Law on Foreigners is increased tenfold, whereas the Law on Foreigners only doubled the maximum fine range for fines proscribed for employer misdemeanours (increase to RSD 2,000,000).

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Milena Jaksic Papac, Partner, Boris Radojcic, Senior Associate, Teodora Budanovic and Kristina Minic, Associates, and Ivana Javor, Junior Associate, Karanovic & Partners

Since the release of the Barbie movie, there’s been an unmistakable global buzz.  Beyond film, it has driven sales across a spectrum of Barbie merchandise, from costumes and makeup to beverages and even a rentable Barbie dreamhouse.  The success of the Barbie movie, dolls, and brand hinges on Mattel’s very prudent approach to protecting their intellectual property rights.

Origins

The story begins in 1956 when Ruth Handler, a co-founder of Mattel Inc, came across a German doll named Bild Lilli during a vacation in Switzerland.   Mattel took the Lilli doll and made some slight cosmetic alterations, changing the doll’s hairline and eyebrows.  Thus, the Barbie doll was born. However, this redesign led to a lawsuit from Bild Lilli’s proprietors against Mattel, alleging infringement of their intellectual property rights.  The dispute was ultimately settled, with Mattel paying $21,600 (around $212,000 in today’s money) to acquire the copyright and patent rights for the Lilli Doll.

Given that Barbie doll sales neared $1.5 billion for Mattel in 2022 alone, this agreement seems like one of history’s most lucrative deals.  Had the legal challenge been lost, or had the settlement not included intellectual property rights, Barbie’s legacy could have faced countless legal battles or intensified competition.

Intellectual Property at Play

Mattel’s strategic approach to intellectual property encompassed an array of facets, including patents, designs, trademarks, and copyrights.  The trajectory of the Barbie brand’s logo, evolving through five iterations before reverting to its original design in 2009, exemplifies the attention to detail that characterizes its intellectual property management.

The pivotal moment was in 1959 when Mattel secured the Barbie trademark, initially confined to “dolls.” Over time, this ambit expanded to encompass diverse categories such as clothing, jewelry, vehicles, and drawing materials.  The famous shade of pink associated with Barbie, unsurprisingly called Barbie pink, is a protected color mark in the USA, while “barbiecore” a term describing the notable Barbie look and Barbie fashion is also registered as a trademark and owned by Mattel.   On top of that, Jack Ryan the head of Mattel’s research and development department, was awarded a patent on the doll’s construction that allowed Barbie to stand upright.

Observing intellectual property elements within the Barbie Movie is truly intriguing.  To illustrate, the appearances of Barbie’s dream house, yacht, and car, which are prominently featured throughout the film, are safeguarded as industrial designs.   The film’s creators had to meticulously consider even the smallest particulars when incorporating these branded items into the storyline.  Adding to the fascination, it’s noteworthy that the formula for a pink burger sauce inspired by Barbie could qualify for trade secret safeguarding.

Disputes

wMattel’s commitment to safeguarding its intellectual property inevitably gave rise to various legal disputes.

Probably the most famous case (Mattel, Inc v. MCA Records, Inc) was when Aqua, a Danish-Norwegian pop band, made the song “Barbie Girl”.  Mattel sued Aqua and the band’s label, alleging trademark and copyright infringement.  The courts eventually dismissed these lawsuits ruling that the song was protected as a parody under the trademark doctrine of nominative use.  The courts held that “the trademark owner does not have the right to control public discourse whenever the public imbues his mark with a meaning beyond its source-identifying function,” and balanced the “public interest in free expression” against the “public interest in avoiding consumer confusion,” and accorded the former decisive weight unless the song title’s appropriation of Barbie “has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”  This case famously ended with the judge “advising the parties to chill.”  Ironically, 12 years after the song was released Mattel licensed the song “Barbie Girl” for advertising Barbie dolls.

In the case of Mattel, Inc. v. Walking Mountain Products, the makers of Barbie attempted to stop an artist from distributing his series called “Food Chain Barbie.” This series portrayed Barbie being subjected to various kitchen appliances, with some instances suggesting that she found pleasure in such scenarios.  The court found that these artworks were allowed under “fair use” because they were parodying Barbie and the messages associated with her.  The court also stated that parodies don’t have to use only the smallest amount of the original work, so reproducing the whole Barbie doll in the artwork was okay.

In the case Mattel, Inc. v. 3894207 Canada Inc., the Supreme Court of Canada ruled that trademarks are only protected for the specific products or services they are used for.  In this case, the court found that the trademark “BARBIE” was only famous and distinct for dolls and doll accessories, and there was no evidence that it was used for restaurant services, take-out services, catering, or banquet services. Since the products and services were different and sold in separate places, the court did not see a significant risk of confusion for consumers.  As a result, the defendant was allowed to use the “BARBIE” mark for their services without infringing on Mattel’s rights.

Barbie in the Western Balkans

In Serbia, an astonishing array of nearly 80 Barbie products are protected, spanning intriguing domains. From cosmetics that mirror her glamour to scientific tools for exploration, Barbie’s influence extends to unexpected corners.  Picture this: Barbie-branded toothpaste!  This captivating fusion of creativity and intellectual property defies expectations, making Barbie’s impact truly electrifying.

Bosnia and Herzegovina, Montenegro, and North Macedonia are also in the Barbie World. In the Western Balkans products enjoy protection across various categories.  Noteworthy mentions include elegant jewelry, creatively printed stationery, chic leather goods, and even kitchenware with a touch of glamour.  These instances showcase the iconic Barbie’s fusion with diverse elements, turning intellectual property into a dynamic masterpiece.

Outro

Since the 1980s, thanks to the intellectual property rights it holds, Mattel has been able to develop an extensive range of media and derivative products based on the original Barbie concept.  This autonomy would have been jeopardized, and their commercial success limited if the Lilli Doll litigation had not been resolved in their favor.

In our tech-centric era, ownership of the Barbie brand’s intellectual property is crucial.  Mattel’s exclusive rights enable them to harness AI, VR, and AR, all while safeguarding the brand’s identity and guiding its tech-enhanced growth.

Significantly, Mattel licenses the Barbie brand to over 100 companies, covering a variety of products ranging from nail polish, clothing, and cosmetics to unique items like pink Xbox controllers.  The Barbie emblem ties them all back to the iconic brand.

Barbie’s evolution from a mere doll to a global phenomenon exemplifies the profound impact of astute intellectual property management in shaping the destiny of a brand and its parent company.  Its story of creativity, protection, and strategic foresight reinforces the notion that intellectual property rights aren’t just conceptual – they are the foundation of modern business.

By Milica Novakovic and Bojan Tutic, Associates, Gecic Law

In May 2023 the Government of the Republic of Serbia submitted the official Proposal of the Law on Amendments of the Law on Citizenship of the Republic of Serbia (the Proposal), which is currently in the process of deliberation within the National Assembly.

The Proposal mainly facilitates a much easier path to acquiring Serbian citizenship.

The key changes are outlined further below, although it should be noted that there are other novelties that affect specific groups (e.g. persons granted asylum, persons born abroad with one of their parents being a Serbian citizen). 

Dismissal from foreign citizenship is no longer a precondition for acquiring Serbian citizenship

A foreign citizen who reached the age of 18 and is provided with permanent residence in Serbia needs to fulfil only one condition for acquiring citizenship – to provide a statement that he or she considers the Republic of Serbia to be his or her country.

It is no longer necessary for a foreign citizen to renounce his/her foreign citizenship in order to obtain Serbian citizenship.

It is possible to obtain Serbian citizenship after one year of temporary residency

In addition, a foreign citizen can apply for Serbian citizenship in case of living in Serbia for at least one year on the basis of temporary residence, based on the following cumulative grounds:

• the person acquired a high-school education or higher education in the Republic of Serbia or holds a decision of recognition of a foreign higher education certificate, which decision must be issued by a competent Serbian authority;
• the person is self-employed, employed or engaged based on an out-of-employment basis with a domestic-based employer; and
• provides a statement that he or she considers the Republic of Serbia to be his or her country.

Spouses – a person can acquire Serbian citizenship if his or her spouse holds Serbian citizenship under the previous conditions explained in points a) to c) above, provided that the person provides a statement that he or she considers the Republic of Serbia to be his or her country.

Considering the recently adopted amendments to the Law on Foreigners and Law on Employment of Foreigners, it is possible that the prerequisite for acquiring Serbian citizenship will be increased to three years of living in Serbia based on temporary residence, which will match the new requirement for permanent residency under the said amendments.

Extending the condition regarding marriage duration for foreigners to obtain citizenship

Under the Proposal, a foreign citizen who has been married to a Serbian citizen for at least ten years (instead of three years as per the current requirement) can apply for Serbian citizenship by providing a written statement confirming Serbia to be his or her country.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Milena Jaksic Papac, Partner, Boris Radojcic, Senior Associate, Teodora Budanovic and Kristina Minic, Associates, and Ivana Javor, Junior Associate, Karanovic & Partners