1. Which law is applicable to the legal capacity and right of representation of a legal entity?
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Legal capacity as the ability of a legal entity to be the holder of certain rights and obligations is established by the law, the Founding Act and the Statute. A legal entity acquires legal capacity at the time of its establishment, i.e. at the time of its registration.
The Company Law (Official Gazette of the Republic of Serbia, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018), regulates the legal position of companies and other forms of organisation in accordance with this Law, in particular their establishment, management, status changes, changes in legal form, termination and other issues of importance for their position, as well as the legal position of the entrepreneur. According to this Law, the following legal entities are considered as a company: partnership, limited partnership, limited liability company and joint stock company. A joint stock company appears in two forms, as a public joint stock company and a joint stock company that is not public (private joint stock company).
The Law on Associations (Official Gazette of the RoS, Nos. 51/2009, 99/2011 – another law and 44/2018 – another law) regulates the establishment and legal position of the association, registration and deletion from the register, membership and authorities, status changes and termination of the association, as well as other issues important for the work of the association. This law also regulates the status and functioning of foreign associations.
In general, giving the power of attorney is regulated by the Law of Contract and Torts (Law on Obligations) ("Official Gazette of SFRY", No. 29/78, 39/85, 45/89 - Decision USJ and 57/89, "Official Gazette of FRY", No. 31/93 and "Official Gazette of Serbia and Montenegro", no. 1/2003 - Constitutional Charter), Section 2, starting from Article 84.
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The Company Law (Official Gazette of the Republic of Serbia, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018), regulates the legal position of companies and other forms of organisation in accordance with this Law, in particular their establishment, management, status changes, changes in legal form, termination and other issues of importance for their position, as well as the legal position of the entrepreneur. According to this Law, the following legal entities are considered as a company: partnership, limited partnership, limited liability company and joint stock company. A joint stock company appears in two forms, as a public joint stock company and a joint stock company that is not public (private joint stock company).
The Law on Associations (Official Gazette of the RoS, Nos. 51/2009, 99/2011 – another law and 44/2018 – another law) regulates the establishment and legal position of the association, registration and deletion from the register, membership and authorities, status changes and termination of the association, as well as other issues important for the work of the association. This law also regulates the status and functioning of foreign associations.
In general, giving the power of attorney is regulated by the Law of Contract and Torts (Law on Obligations) ("Official Gazette of SFRY", No. 29/78, 39/85, 45/89 - Decision USJ and 57/89, "Official Gazette of FRY", No. 31/93 and "Official Gazette of Serbia and Montenegro", no. 1/2003 - Constitutional Charter), Section 2, starting from Article 84.
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2. What criteria/rules are used to determine the applicable law (for example the law of incorporation or the actual seat)?
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Article 17 of the Law on Resolving Conflict of Laws with Regulations of other Countries ("Official Gazette of SFRY", No. 43/82 and 72/82 – Amend. “Official Gazette of SRY ", No. 46/96 and “Official Gazette of RS", No. 46/2006 - oth. Law) regulates:
“The affiliation of a legal person shall be determined under the law of the country in which the incorporation took place. If a legal person has its registered seat of business in a country other than the country of incorporation and it has the affiliation of the other country under its law, it shall be regarded as a legal person of that country.”
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“The affiliation of a legal person shall be determined under the law of the country in which the incorporation took place. If a legal person has its registered seat of business in a country other than the country of incorporation and it has the affiliation of the other country under its law, it shall be regarded as a legal person of that country.”
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3. Which international conventions have to be respected?
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Article 16 of the Constitution of the Republic of Serbia (Official Gazette of the RoS, Nos. 98/2006) regulates:
“The foreign policy of the Republic of Serbia rests on the generally recognized principles and rules of international law.
The generally accepted rules of international law and the ratified international treaties are an integral part of the legal order of the Republic of Serbia and are directly applied. Confirmed international treaties must be in accordance with the Constitution.”
Furthermore, by means of the Stabilization and Association Agreement between the European Communities and their Member States and the Republic of Serbia (SAA) coming into force and the granting of candidate status to Serbia, sectoral cooperation between the Republic of Serbia and the EU has been expanded and now encompasses all the chapters from the acquis communautaire. In other words, apart from the most frequent and most important forms of cooperation so far, those in the areas of trade and investment, sectoral cooperation is also being realised in the areas of common foreign and security policy, energy, the rule of law, etc. Certain sectoral areas of cooperation have been institutionalised and take place within separate mechanisms established for EU candidate countries.
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“The foreign policy of the Republic of Serbia rests on the generally recognized principles and rules of international law.
The generally accepted rules of international law and the ratified international treaties are an integral part of the legal order of the Republic of Serbia and are directly applied. Confirmed international treaties must be in accordance with the Constitution.”
Furthermore, by means of the Stabilization and Association Agreement between the European Communities and their Member States and the Republic of Serbia (SAA) coming into force and the granting of candidate status to Serbia, sectoral cooperation between the Republic of Serbia and the EU has been expanded and now encompasses all the chapters from the acquis communautaire. In other words, apart from the most frequent and most important forms of cooperation so far, those in the areas of trade and investment, sectoral cooperation is also being realised in the areas of common foreign and security policy, energy, the rule of law, etc. Certain sectoral areas of cooperation have been institutionalised and take place within separate mechanisms established for EU candidate countries.
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4. Are there international conventions with regard to certain countries?
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Yes, you can see the international conventions with regard to the certain countries at the following link: http://www.mfa.gov.rs/en/foreign-policy/bilateral-issues
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5. Are all companies registered in a public register? What are the effects of registration? (please add a link to the register, if possible)
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Yes, all companies are registered in a public register - The Serbian Business Registers Agency (SBRA). Founding the SBRA has brought about significant reforms in the field of business registration, as well as the harmonisation of Serbia’s legislation with European standards. The first European directive instructs every member-country to form a standardised central register, a business register or a register of business entities.
Registration in the public register is obligatory for companies. A company cannot be created without being entered in the register. The time of enrolment of the company in the register is the time of acquisition of the status of a legal entity.
Company Law (Official Gazette of the RoS, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018):
- Article 3: “The Company acquires the status of a legal entity by registration in the Register of Business Entities in accordance with the law on registration.”
In Serbian law, companies acquire the status of a legal entity on the day of their registration in the register, and the registration is done based on the decision of the Serbian Business Registers Agency (SBRA).
Law on the Procedure of Registration with the Serbian Business Registers Agency (Official Gazette of the RoS, Nos. 99/2011, 83/2014 and 31/2019):
- Article 3: The principle of transparency and accessibility stipulates that registered data and documents shall be placed in the public domain, available to all parties, either on the Agency’s website or through direct access to the Register, unless transparency and access are restricted or excluded by law.
The Serbian Business Registers Agency (SBRA) is obliged to provide insight, i.e. to provide all the data that are entered in the register to any person who requests it.
For the data contained in the Register, the principle of trust in the truthfulness of the data applies. It is considered that what is recorded in the public register is accurate, i.e. true.
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Registration in the public register is obligatory for companies. A company cannot be created without being entered in the register. The time of enrolment of the company in the register is the time of acquisition of the status of a legal entity.
Company Law (Official Gazette of the RoS, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018):
- Article 3: “The Company acquires the status of a legal entity by registration in the Register of Business Entities in accordance with the law on registration.”
In Serbian law, companies acquire the status of a legal entity on the day of their registration in the register, and the registration is done based on the decision of the Serbian Business Registers Agency (SBRA).
Law on the Procedure of Registration with the Serbian Business Registers Agency (Official Gazette of the RoS, Nos. 99/2011, 83/2014 and 31/2019):
- Article 3: The principle of transparency and accessibility stipulates that registered data and documents shall be placed in the public domain, available to all parties, either on the Agency’s website or through direct access to the Register, unless transparency and access are restricted or excluded by law.
The Serbian Business Registers Agency (SBRA) is obliged to provide insight, i.e. to provide all the data that are entered in the register to any person who requests it.
For the data contained in the Register, the principle of trust in the truthfulness of the data applies. It is considered that what is recorded in the public register is accurate, i.e. true.
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6. Does a foreign company have to be registered in your public company register?
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Article 569 of the Company Law (Official Gazette of the RoS, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018) regulates: “The branch of the domestic and foreign company is registered in accordance with the law on registration.”
As well as a branch of a domestic company, the branch of a foreign company must also be registered. The Company Law does not specify which company is considered a foreign company. The Law on Resolving Conflict of Laws with Regulations of other Countries ("Official Gazette of SFRY", No. 43/82 and 72/82 – Amend. “Official Gazette of SRY ", No. 46/96 and “Official Gazette of RS", No. 46/2006 - oth. Law), Article 17 stipulates: “The affiliation of a legal person shall be determined under the law of the country in which the incorporation took place.” (see answer to question 2).
Furthermore, Articles 573 of the Company Law regulates that a branch of a foreign company is its separate organisational part through which that company performs activities in the Republic of Serbia in accordance with the law. This article further prescribes which information about the branch must be registered, and these data are entered in the public register.
Also, Article 574 of the Company Law regulates that the representative office of a foreign company (hereinafter: representative office) is its separate organisational part which can carry out preliminary and preparatory actions in order to conclude the legal business of that company. The representative office does not have the status of a legal entity. The representative office can only conclude legal affairs regarding its current business. Furthermore, Article 577 regulates that the representative office is obliged to register in accordance with the law on registration.
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As well as a branch of a domestic company, the branch of a foreign company must also be registered. The Company Law does not specify which company is considered a foreign company. The Law on Resolving Conflict of Laws with Regulations of other Countries ("Official Gazette of SFRY", No. 43/82 and 72/82 – Amend. “Official Gazette of SRY ", No. 46/96 and “Official Gazette of RS", No. 46/2006 - oth. Law), Article 17 stipulates: “The affiliation of a legal person shall be determined under the law of the country in which the incorporation took place.” (see answer to question 2).
Furthermore, Articles 573 of the Company Law regulates that a branch of a foreign company is its separate organisational part through which that company performs activities in the Republic of Serbia in accordance with the law. This article further prescribes which information about the branch must be registered, and these data are entered in the public register.
Also, Article 574 of the Company Law regulates that the representative office of a foreign company (hereinafter: representative office) is its separate organisational part which can carry out preliminary and preparatory actions in order to conclude the legal business of that company. The representative office does not have the status of a legal entity. The representative office can only conclude legal affairs regarding its current business. Furthermore, Article 577 regulates that the representative office is obliged to register in accordance with the law on registration.
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7. Who has the legal right of representation of a legal entity?
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Article 31 of the Company Law (Official Gazette of the RoS, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018) regulates that the legal (statutory) representatives of a company within the meaning of this Law are persons who are determined by law as such for each particular type of company. A legal representative of a company may be a natural person or a company registered in the Republic of Serbia. The company must have at least one legal representative who is a natural person.
Furthermore, under Article 32, in addition to legal representatives, company representatives within the meaning of this Law are also persons who, by an act or decision of the competent body of a company, are authorised to represent the company and, as such, are registered in accordance with the law on registration.
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Furthermore, under Article 32, in addition to legal representatives, company representatives within the meaning of this Law are also persons who, by an act or decision of the competent body of a company, are authorised to represent the company and, as such, are registered in accordance with the law on registration.
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8. Must the right of representation be registered (if yes, please add a link to the register, if possible)?
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Yes, the right of representation must be registered. Legal representatives of the company are registered in accordance with the law on registration (Article 31 of Company Law).
A representative determined by law as such, as well as a representative designated by a general act of a company, shall be entered in the register. At the time of enrolment of the representatives in the Register, the scope of their powers is also entered, or whether their powers are limited or not.
In addition to legal representatives, company representatives within the meaning of this Law are also persons who, by an act or decision of the competent body of a company, are authorised to represent the company and are registered in accordance with the law on registration. (Article 32 of Company Law).
Company representatives are registered with the Serbian Business Registers Agency (SBRA), and you can access the SBRA via the following link: https://apr.gov.rs/home.1435.html
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A representative determined by law as such, as well as a representative designated by a general act of a company, shall be entered in the register. At the time of enrolment of the representatives in the Register, the scope of their powers is also entered, or whether their powers are limited or not.
In addition to legal representatives, company representatives within the meaning of this Law are also persons who, by an act or decision of the competent body of a company, are authorised to represent the company and are registered in accordance with the law on registration. (Article 32 of Company Law).
Company representatives are registered with the Serbian Business Registers Agency (SBRA), and you can access the SBRA via the following link: https://apr.gov.rs/home.1435.html
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9. If the right of representation must be registered, what legal effect does the registration have with respect to third parties?
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Article 33 of the Company Law (Official Gazette of the RoS, Nos. 36/2011, 99/2011, 83/2014 – another law, 5/2015, 44/2018 and 95/2018) provides that the representative is required to act in accordance with the limitations of his powers which are determined by the company's acts or decisions of the competent bodies of the company. The limitation of the representative’s powers cannot be emphasised to third parties.
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10. May the rights of the legal representative be restricted? If yes, please explain how (e.g. by laws or the articles of association)?
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When giving the power to represent, the representative’s powers may be limited in different ways. The representative is required to hold the authority that he has and not to exceed it. The content of the legal representative can be determined in different ways, either by general acts of the company, or when appointing a representative, and it obliges the representative.
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11. Does that restriction have any legal effect towards third persons?
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The representative is obliged to hold the authority that he has and not to exceed it. In the event of exceeding the authority or exercise of authority other than that which is entitled to it, the representative shall be liable to the company for any damage resulting therefrom. However, these limitations may not be invoked against third parties. Third parties are not obliged to take into account the limitations of the representatives who are registered in the register as representatives of the company.
As long as representative acts within the limits of his powers of representation, he is not responsible for the effects of a legal transaction that he has undertaken in the name and on behalf of the company, nor guarantees that the participants will fulfil their obligations.
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As long as representative acts within the limits of his powers of representation, he is not responsible for the effects of a legal transaction that he has undertaken in the name and on behalf of the company, nor guarantees that the participants will fulfil their obligations.
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12. How can the representative prove the right of representation (e.g. extract in paper from the registry certified by some authorities, extract from public registry)?
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The representative can prove the right of representation with the paper extract from the public registry.
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13. Are there any circumstances where the transactions entered into by the legal representative of a company are considered not binding on the company (e.g. for a valid transaction should there be a decision or consent of the shareholders, supervisory body)? If yes, please explain.
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Company Law provides that the company's representatives, apart from legal representatives (directors), may be persons who are authorised by the act or decision of the competent body of the company to represent the company and, as such, have been registered in accordance with the law on registration.
Each representative of a company is obliged to act in accordance with the limitations of its authorisations which are determined by the company’s acts or decisions of the competent bodies of the company
However, in accordance with the principle of accuracy and the principle of confidence in the data entered in the register (Article 6 of the Company Law), such a limitation of powers can not be emphasised to third parties, which implies that all legal transactions are undertaken by persons duly registered for binding representation of the company regardless of the possible limitations established by the company's acts or decisions of the competent bodies of the company.
The only exception is the limitation of the power of attorney in the form of joint representation, or mandatory co-signing that can be pointed out to third parties, if they are registered in accordance with the law on registration (Article 33 of the Company Law).
However, in certain cases, the Law envisages the approval of the assembly of the company, based on the provisions of the law itself. Thus, the sale of high value assets (within the meaning of the provisions of Articles 470-472 of the Company Law) can be carried out only if such acquisition, i.e. the sale, is previously or later approved by the assembly. In this case, if the transfer of the property of great value was carried out without the consent of the assembly, the legal transaction is effective because it has been taken by a representative but there is a possibility that it will be annulled on the basis of a legal action by a shareholder, based on a court decision that approves such a request. The Company Law provides that legal action is annulled on the basis of a legal action by shareholders or members which must be submitted within a specified period of time. Such a legal transaction is not null and void. In other words, only a company has obligations from such a legal transaction and cannot give up on it, but legal action based on a lawsuit by members or shareholders can be cancelled.
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Each representative of a company is obliged to act in accordance with the limitations of its authorisations which are determined by the company’s acts or decisions of the competent bodies of the company
However, in accordance with the principle of accuracy and the principle of confidence in the data entered in the register (Article 6 of the Company Law), such a limitation of powers can not be emphasised to third parties, which implies that all legal transactions are undertaken by persons duly registered for binding representation of the company regardless of the possible limitations established by the company's acts or decisions of the competent bodies of the company.
The only exception is the limitation of the power of attorney in the form of joint representation, or mandatory co-signing that can be pointed out to third parties, if they are registered in accordance with the law on registration (Article 33 of the Company Law).
However, in certain cases, the Law envisages the approval of the assembly of the company, based on the provisions of the law itself. Thus, the sale of high value assets (within the meaning of the provisions of Articles 470-472 of the Company Law) can be carried out only if such acquisition, i.e. the sale, is previously or later approved by the assembly. In this case, if the transfer of the property of great value was carried out without the consent of the assembly, the legal transaction is effective because it has been taken by a representative but there is a possibility that it will be annulled on the basis of a legal action by a shareholder, based on a court decision that approves such a request. The Company Law provides that legal action is annulled on the basis of a legal action by shareholders or members which must be submitted within a specified period of time. Such a legal transaction is not null and void. In other words, only a company has obligations from such a legal transaction and cannot give up on it, but legal action based on a lawsuit by members or shareholders can be cancelled.
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14. Is it possible to verify the right of representation by digital means from the register? Please indicate the source and in which language the inquiries should be conducted.
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Yes, it is possible to verify the right of representation by digital means from the register, but the database search of registers is possible only in Serbian language.
You can access the register by following this link: https://apr.gov.rs/searches.4090.html
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You can access the register by following this link: https://apr.gov.rs/searches.4090.html
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15. When anti-money laundering measures are applied, how are the beneficial owners of a legal entity registered in your country identified? Would there be different possibilities for professionals from other countries to identify the beneficial owners? Please indicate the source and in which language the inquiries should be conducted.
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On 31 December 2018, the Central Register of Beneficial Owners was established in the Serbian Business Registers Agency (SBRA), in accordance with the Law on the Central Register of Beneficial Owners ("Official Gazette of RS", No. 41/18).
The Central Register is a public, unique, central, electronic database of natural persons – beneficial owners of legal entities and other entities registered in the Republic of Serbia (registered entities).
The Law on the Central Register of Beneficial Owners regulates the establishment, content, basic assessment and maintenance of the Central Register of beneficial owners of legal entities and other entities registered in the Republic of Serbia.
The central register of beneficial owners is kept electronically, through the Agency's website:
https://reid.apr.gov.rs/IDF/?wa=wsignin1.0&wtrealm=https%3a%2f%2freid.apr.gov.rs%2fSSO%2f&wctx=rm%3d0%26id%3dpassive%26ru%3d%252fSSO%252fprotected%252fdefault.aspx&wct=2019-05-21T06%3a35%3a52Z&wreply=https%3a%2f%2freid.apr.gov.rs%2fSSO%2fProtected%2f
The user must have:
- a qualified electronic certificate (electronic signature) issued by a certification body in the Republic of Serbia,
- installed electronic card reader and installed the NEXU electronic signature application (created by the Agency, which is used for all electronic services provided by the Agency),
- the account on the system for centralised user registration of the Serbian Business Registers Agency (the order in the system mentioned is used to access all electronic services of the Agency).
Access to the Central Register is open to all users around the world under the above-mentioned technical conditions, and the inquiries can be conducted in Serbian and English.
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The Central Register is a public, unique, central, electronic database of natural persons – beneficial owners of legal entities and other entities registered in the Republic of Serbia (registered entities).
The Law on the Central Register of Beneficial Owners regulates the establishment, content, basic assessment and maintenance of the Central Register of beneficial owners of legal entities and other entities registered in the Republic of Serbia.
The central register of beneficial owners is kept electronically, through the Agency's website:
https://reid.apr.gov.rs/IDF/?wa=wsignin1.0&wtrealm=https%3a%2f%2freid.apr.gov.rs%2fSSO%2f&wctx=rm%3d0%26id%3dpassive%26ru%3d%252fSSO%252fprotected%252fdefault.aspx&wct=2019-05-21T06%3a35%3a52Z&wreply=https%3a%2f%2freid.apr.gov.rs%2fSSO%2fProtected%2f
The user must have:
- a qualified electronic certificate (electronic signature) issued by a certification body in the Republic of Serbia,
- installed electronic card reader and installed the NEXU electronic signature application (created by the Agency, which is used for all electronic services provided by the Agency),
- the account on the system for centralised user registration of the Serbian Business Registers Agency (the order in the system mentioned is used to access all electronic services of the Agency).
Access to the Central Register is open to all users around the world under the above-mentioned technical conditions, and the inquiries can be conducted in Serbian and English.
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