Obligation to Make a Contribution
Article 188
(1) (Supplemented, SG No. 84/2000) The shareholders shall be obligated to make contributions for the shares subscribed, which shall cover the fixed by the Articles of Association portion of the value of the shares. The remainder shall be paid in within a period stipulated in the Articles of Association, but not later than two years of the company's registration, or increase of capital respectively.
(2) Partial contributions may vary for individual shareholders, if the Articles of Association provide so expressly.
Consequences of Delaying Contributions
Article 189
(1) The shareholders which have not made their contributions within the specified time periods shall owe interest, unless the Articles of Association do not provide for liquidated damages. In case of a delayed non-monetary contribution, compensation for actual damage suffered may be claimed.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Shareholders whose contributions are overdue, if they do not make the due contributions within one month of written notice to do so, shall be deemed expelled. The notice must be made public in the commercial register unless the transfer of the shares is subject to the consent of the company.
(3) A shareholder so expelled shall lose its shares and any contributions made. The shares of a shareholder so expelled shall be cancelled and destroyed. The company shall offer for sale new shares substituting the cancelled ones. The contributions made by the expelled shareholder shall be appropriated to the company's reserve fund.
Interest
Article 190
(1) The shareholders shall not be paid interest on contributions made, except in cases provided for in the Articles of Association.
(2) (Amended, SG No. 84/2000) Where the shareholders have made partial contributions in different proportions, interest shall be due on the difference, unless the Articles of Association provide otherwise. Such interest shall be paid from the profit prior to the dividends in accordance with article 247a, regardless of the decision of the General Meeting of the Shareholders concerning the distribution of profit.
(3) The fruits derived from contributions made prior to incorporation shall be in the company's favour, unless the Articles of Association provide otherwise.
Security
Article 191
The Articles of Association may provide that the shareholders shall provide security for the portion not contributed.
Section V
Increase of Capital

Prerequisites
Article 192
(1) The capital stock may be increased by issuing new shares, by increasing the nominal value of shares already issued, or by converting debentures into shares pursuant to Article 215.
(2) The general meeting of shareholders resolution to increase the capital stock shall be adopted by a two thirds majority of the votes of the shares represented at the meeting. The Articles of Association may provide for a larger majority, as well as for additional conditions.
(3) (Amended, SG No. 84/2000) Where shares of various classes exist, the resolution shall be adopted by each class.
(4) Where the new shares are to be sold at a price exceeding their nominal value, the minimum sale price shall be specified in the general meeting resolution.
(5) An increase of the capital stock is admissible only after the specified by the Articles of Association amount has been fully paid up.
(6) (New, SG No. 84/2000, supplemented, SG No. 66/2005) In the case of increase of capital in violation of article 161, paragraph 4, the members of the managing board, respectively the board of directors, shall be jointly liable for the contributions for subscribed own shares. If any person subscribes shares on its behalf and at the account of the company, they shall be deemed purchased entirely at the account of that person.
(7) ( New, SG No. 63/1995, renumbered from Paragraph 6, supplemented, SG No. 84/2000) In the case of increase of capital Chapter Fourteen, Sub-section II shall apply, respectively, while an increase of capital through subscription shall be effected under terms and procedure established by law.
(8) (New, SG No. 114/1999, renumbered from Paragraph 7, SG No. 84/2000) For the purposes of recording an increase in capital through subscription, it shall be necessary to present a confirmation of a prospectus unless no prospectus is required by the law.
Requirements for Registration of the Increase of Capital
Article 192a
(New, SG No. 84/2000)
(1) To enter the increase of capital in the commercial register, it is required that:
1. the new shares are subscribed;
2. at least 25 percent of the subscribed new shares are paid in;
3. the difference between the nominal value and the issue price of the new shares is paid up.
(2) Should the new shares not be fully subscribed, the capital shall be increased only by the amount of the subscribed shares, if the general meeting resolution on the increase provides for such a possibility.
(3) A list of the persons who have subscribed the new shares, certified by the managing board, respectively the board of directors, shall be provided to the commercial register.
Increase of the Capital Stock by Non-Monetary Contributions
Article 193
(1) (Previous Article 193, SG No. 66/2005) Where the capital stock is increased by non-monetary contributions, the general meeting resolution shall specify the subject of each contribution, the contributor, and the nominal value of shares given for such contribution.
(2) (New, SG No. 66/2005, amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The experts' conclusion under Article 72(2) is a part of the materials under Article 224 and shall be submitted to the Commercial Register for publication together with the decision to increase the capital.
Preferential Right of Shareholders in Emissions of New Shares
(Title amended, SG No. 66/2005)
Article 194
(1) (Amended, SG No. 84/2000) Each shareholder is entitled to acquire a part of the new shares in proportion to its share in the capital stock prior to the increase.
(2) (Amended, SG No. 84/2000) For shares of different classes, the right referred to in paragraph 1 shall apply to the shareholders of the respective class. The rest of the shareholders shall exercise their right after the shareholders of the class in which the new shares are issued.
(3)(New, SG No. 84/2000, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The right of the shareholders under paragraphs 1 and 2 shall lapse after the expiration of a period of time specified by the general meeting, which shall not be earlier than one month from the date that the invitation to subscribe shares has been made public in the Commercial Register. The invitation to subscribe new shares shall be made public together with the decision for increase of capital in the Commercial Register.
(4) (New, SG No. 84/2000, supplemented, SG No. 66/2005, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The shareholders' right under Paragraph (1) and (2) may be restricted or forfeited only pursuant to a general meeting resolution passed with two thirds of the votes of the shares represented. The managing board, respectively the board of directors, shall submit a report on the reasons for the restriction or forfeiture of the rights and shall justify the issue price of the new shares. The general meeting resolution shall be submitted to the commercial register for publication.
Conditional Increase of the Capital
Article 195
The increase of the capital stock may be conditional upon the buying of the shares by certain persons at a certain price, or against debentures issued by the company.
Increase of the Capital Stock by the Managing Board
(Board of Directors)
(Heading amended, SG No. 84/2000)
Article 196
(1) (Previous Article 196, amended and supplemented, SG 84/2000) The Articles of Association may empower the managing board, or the board of directors as the case may be, to increases the capital stock up to a certain nominal amount in the course of five years from the date of incorporation, by issuing new shares. A resolution to the same effect may also be passed by amending the Articles of Association in accordance with the provision of article 192, paragraph 3, for a period not exceeding five years from the date of registration of the amendment.
(2) (New, SG No. 84/2000) In the case of increase of capital pursuant to paragraph 1, article 194, paragraphs 1 and 2 shall apply.
(3) (New, SG No. 84/2000, amended, No. 66/2005) The managing board, respectively the board of directors, may preclude or restrict the shareholders' right referred to in article 194, paragraph 1, only if it is empowered to do so by a general meeting resolution adopted by a majority of two thirds of the votes of the represented shares. The power may not be given for a period longer than the period referred to in paragraph 1. In such a case, the increase of capital may also be effected under the procedure of articles 193 and 195.
Increase of the Capital Stock from Company Funds
Article 197
(1) The general meeting may resolve to increase the capital stock by partial capitalisation of profits. The resolution shall be adopted within three months from the date that the financial statement for the previous year is approved, with a majority of the votes of three quarters of the shares represented at the meeting.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The company's balance sheet shall be presented and the fact that the increase is from the company's own funds shall be explicitly stated upon filing the resolution to increase the capital.
(3) (Supplemented, SG No. 84/2000) The new shares shall be allocated among shareholders, including the company if it possesses its own shares, on a pro rata basis. Any general meeting resolution in contravention of the latter provision shall be null and void.
Receipt of Shares
Article 198
(1) Upon registering the increase of the capital stock pursuant to the preceding article, the supervisory board, or the board of directors as the case may be, shall, without delay, invite the shareholders to receive their shares.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) New bearer shares, which have not been claimed within one year of the date on which the increase of the capital stock is entered in the Commercial Register, shall be sold on the stock exchange. The shareholders' rights shall lapse, and moneys from the sale shall be appropriated to the company's reserve fund.
Section VI
Reduction of Capital

Ordinary Reduction
Article 199
(1) A reduction of the capital stock shall be implemented by a general meeting resolution.
(2) (Amended, SG No. 84/2000) If there are several classes of shares, resolutions of each class of shareholders shall be necessary to reduce the capital stock.
(3) The resolution shall set forth the purpose of the reduction and the method by which it is to be effected.
Methods of Reduction
Article 200
(1) The capital stock may be reduced:
1. by reduction of the nominal value of shares;
2. by cancellation of shares.
Reduction of Capital Stock by Cancellation of Shares
Article 201
(1) Shares may be cancelled forcibly or after their acquisition by the company.
(2) (Supplemented, SG No. 84/2000) Forcible cancellation of shares shall be allowed if provided for in the Articles of Association and if the shares were subscribed under that condition.
(3) The prerequisites for, and the method of, forcible cancellation shall be set forth in the Articles of Association.
Protection of Creditors
Article 202
(Amended, SG No. 84/2002)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) To creditors whose claims have arisen prior to notification in the Commercial Register of the resolution on the reduction of capital, the provisions of Articles 150 through 153 shall apply.
(2) The provision of paragraph 1 shall not apply when the reduction of capital is made for the purpose of covering losses. In this case the shareholders shall not be released from the obligation to make contributions.
(3) The provision of paragraph 1 shall not apply when the reduction of capital is made with own shares fully paid-in and acquired for free or with funds under 247a, paragraphs 1 - 3. In such a case, article 187c, paragraph 4 shall apply respectively.
Simultaneous Reduction and Increase of the Capital
(Title new, SG No. 83/1996, amended, SG No. 84/2000)
Article 203
(Amended, SG No. 83/1996, No. 84/2000)
(1) The capital of a company may be simultaneously reduced and increased in such a way that the reduction takes effect only if the envisaged increase of capital is made.
(2) In the cases under paragraph 1, the capital may be reduced to a level below the minimum established by law, if at least this minimum is achieved with the increase of capital.
(3) The provision of article 202, paragraph 1 shall not apply, if, as a result of the increase, the amount of capital before its change is achieved or exceeded.
Section VII
Debentures

Procedure for Issuing Debentures
Article 204
(1) (Amended, SG No. 114/1999, SG No. 58/2003) Debentures may only be issued by a joint-stock company. The issuance of debentures by public offering may be done at least two years after the company's recordation in the commercial register at the earliest, and provided it has two annual financial statements that have been approved by the general meeting.
(2) (Amended, SG No. 114/1999) The requirements under para 1 shall not apply to debentures issued or secured by a bank or by the State.
(3) (Amended and supplemented, SG No. 61/2002) Resolutions to issue debentures may be adopted by the general meeting of shareholders, which may duly authorise the board of directors, or the managing board, respectively, following the procedure set out in Article 196.
(4) Debentures of same issue and same nominal value shall rank pari passu.
(5) (New - SG No. 63/1995, supplemented, SG No. 61/2002) Debentures may be in the form of debenture stock and debenture certificates. The rules for shares stipulated in this Act, with the exception of Article 176, para 2, and Article 184, para 2, shall apply to the issue, transfer and pledge of debenture stock and debenture certificates.
Requirements and Procedure for Offering
Article 205
(Amended, SG No. 63/1995; No. 61/2002)
(1) Issuance of debentures through subscription and through other forms of public offering shall be done in accordance with terms, conditions and procedures as prescribed by law.
(2) In issuing debentures in cases other than those referred to in para 1, the company shall prepare a proposal for subscribing debentures that shall contain, at the minimum:
1. The resolution referred to under Article 204, para 3;
2. (repealed, SG No. 58/2003);
3. The total nominal value and the issue price of the debenture loan;
4. Number, type, nominal value and issue price of the debenture offered, and any restrictions envisaged as to their transfer;
5. For interest-bearing debentures, time to maturity of the debentures, the redemption schedule of the loan, including grace period, if any, interest payments, the method of their accrual and the period of payment;
6. For debentures with other forms of yield, the method of generating the yield and payment maturities;
7. Type and size of collateral, if any;
8. Method and term of payment of interest and principal;
9. Start and end date, and a place and procedure for subscribing the debentures;
10. Terms for subscribing the debentures;
11. Minimum and maximum size of cash contributions raised, under which the loan shall be considered contracted.
(3) Debentures shall be issued only upon full payment of the issue price.
(4) In the resolution referred to in Article 204, para 3, on issuing a non-public issue of debentures, a provision may be made that the legal provisions regarding the trustee of debenture-holders and realization of a public issue of debentures, respectively, shall apply.
Holding of Offering
(Title amended, SG 61/2002)
Article 206
(1) (Amended, SG No. 61/2002) The raising of moneys and the delivery of the debentures shall be performed by a bank or an investment intermediary.
(2) (Amended, SG No. 61/2002) Subscribers shall pay the relevant moneys into a third-party transaction account with a bank specified by the company. The sums in the said account may not be used prior to the announcement referred to in para 6.
(3) (Amended, SG No. 61/2002) Under the resolution referred to in Article 204, para 3, the conditions under which the loan is to be considered contracted shall be specified. An obligatory condition shall be that the issue price of all subscribed debentures must be paid in full.
(4) (Amended, SG No. 61/2002). Within 14 days of the close of subscription, the company shall enter into a contract with a bank, establishing the terms and procedure of servicing payments under the debenture loan.
(5) (Amended, SG No. 61/2002) Should the term referred to in Article 205, para 2, Item 9, expire short of compliance with the terms provided for the contracting of the loan, moneys paid up shall be reimbursed to the subscribers together with such interest as accrued by the bank.
(6) (New, SG No. 61/2002, amended, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Within one month following the end date for subscribing the debentures as referred to in Article 205, Item 9 of Paragraph (2), the managing body of the company shall present at the Commercial Register for publication an announcement of the contracted debenture loans, stating:
1. the loan size;
2. the date as of which the term to maturity begins;
3. the maturity date, for interest and principal payments;
4. the bank as per para 4 servicing payments under the debenture loan;
5. the place, date, time and agenda of the first general meeting of debenture-holders.
(7) (New, SG No. 61/2002, amended, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The date for holding the first general meeting of debenture-holders may not be later than 30 days following the publication referred to in Paragraph (6). The place for holding the meeting may not differ from the company's domicile.
(8) (New, SG No. 61/2002) The company shall immediately inform representatives of the debenture-holders as referred to in Article 209 and the bank servicing payments under the debenture loan of any changes in its business activity that are relevant to its obligations under the debentures issued.
Nullity of a Resolution to Issue Debentures
Article 207
Any decision of the company relating to the following shall be null and void:
1. A change in the terms under which debentures have been subscribed;
2. Issuing new debentures under preferential terms of redemption, unless there is agreement by the general meetings of debenture-holders of preceding unredeemed issues.
First general meeting of debenture-holders
(Title new, SG No. 103/1993)
Article 208
(Amended, SG No. 61/2002)
The first meeting of debenture-holders shall be deemed legitimate provided one half of the subscribed loan is represented.
Representation of Debenture-Holders
Article 209
(1) The holders of debentures of the same issue shall form a group for the protection of their interests before the company.
(2) The group shall be represented by trustees elected by the general meeting of debenture-holders. These trustees may not be more than three.
Limitations on Representation
Article 210
(1) The following may not be trustees as per the preceding article:
1. the debtor company;
2. (amended, SG No. 61/2002) persons related to the debtor company;
3. companies which have guaranteed, in part or in total, the liabilities assumed;
4. members of the supervisory board, the managing board or the board of directors of the company, or descendants, ascendants and spouses thereof;
5. persons who are prohibited by law from serving on company governing bodies;
(2) Trustees may be recalled by a general meeting resolution of debenture-holders.
Powers of the Trustee
Article 211
Trustees may perform acts to protect the debenture-holders' interests pursuant to resolutions of the general meeting of debenture-holders.
Participation of Trustees in the General Meeting of Shareholders
Article 212
(1) The trustees of debenture-holders may participate in the general meeting of shareholders without the right to vote. They may obtain information under the same terms as shareholders.
(2) Where decisions are adopted concerning the performance of obligations under the terms of the debenture loan, the general meeting of shareholders shall hear the opinion of the debenture-holders' trustees.
Remuneration of Trustees
Article 213
(1) The remuneration of the debenture-holders' trustees shall be fixed by the company and shall be paid on its account. Should the company fail to fix such remuneration, the general meeting of debenture-holders shall do so.
(2) Should the company object to the amount so fixed, the remuneration shall be fixed by an order of the district court upon application by the trustees.
General Meeting of Debenture-Holders
Article 214
(1) (Supplemented, SG No. 61/2002, amended, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The general meeting of debenture-holders shall be convened by the trustees of the debenture-holders through an invitation posted in the Commercial Register at least 10 days prior to the meeting date.
(2) (Amended, SG No. 61/2002) The general meeting may also be called upon the request of the holders of not less than one-tenth of the respective debenture issue, or, if liquidation proceedings have commenced, upon the request of the liquidators of the company.
(3) The trustees of the debenture-holders shall be bound in duty to call the general meeting of debenture-holders upon receipt of notice from the governing bodies of the joint-stock company as to:
1. a proposed amendment of the company's purposes or type, or for transformation of the company;
2. (amended, SG No. 61/2002) a proposal to issue a new issue of preferred debentures.
(4) Each issue of debentures shall constitute a separate general meeting.
(5) The provisions for the general meeting of shareholders shall apply mutatis mutandis to the general meeting of debenture-holders.
(6) The general meeting of shareholders shall be bound in duty to review a general meeting of debenture-holders resolution.
Section VIII
Conversion of Debentures into Shares

Resolution on Conversion of Debentures into Shares
Article 215
(1) The general meeting may resolve on the issuing of convertible debentures. This type of debentures may not be issued by companies in which the State owns more than 50 per cent of the capital stock. The shareholders may subscribe preferentially such debentures under the terms which apply to a subscription for a new issue of shares.
(2) The procedure for the conversion of debentures into shares shall be specified in the general meeting resolution on the issuing.
(3) The general meeting of shareholders may lay down the terms under which holders of debentures which are not redeemable by conversion into shares may so convert them.
(4) The issue price of the converted debentures may not be lower than the nominal value of the shares which the debenture-holders would acquire by conversion.
(5) In case of reduction of the capital stock because of losses through a reduction of the number of shares or of the nominal value thereof, the rights of debenture-holders shall be reduced proportionally.
Terms of Validity of Resolution to Issue of New Debentures
Article 216
A resolution to issue new debentures convertible into shares shall be valid subject to approval by the general meeting of debenture-holders which have acquired the right to convert debentures into shares.
Conversion upon Increase of Capital Stock
Article 217
Upon adoption of a resolution to increase the capital stock, the managing board, or the board of directors as the case may be, shall determine the period within which debentures may be converted into shares. This period may not exceed three months.
Registration of the Altered Capital Stock
Article 218
(Amended, SG No. 61/2002)
The managing board, or the board of directors, as the case may be, shall apply for registration of the increase in the capital stock occurring as a result of conversion of debentures into shares.
Section IX
Joint-Stock Company Organs

Types of Organs
Article 219
(1) (Previous Article 219, SG No. 84/2000) The joint-stock company organs shall be:
1. the general meeting of shareholders;
2. the board of directors (one-tier system), or the supervisory board and the managing board (two-tier system).
(2) (New, SG No. 84/2000) In a single person joint-stock company, the single owner of the stock shall decide on issues within the competence of the general meeting.
Subsection I
General Meeting of Shareholders
Composition of the General Meeting
Article 220
(1) (Supplemented, SG No. 58/2003) The general meeting comprises the voting shareholders. A voting shareholder may participate in a general meeting either in person or by proxy. No member of the board of directors or of the supervisory or managing board, as the case may be, may be proxy for any shareholder.
(2) (Amended, SG No. 58/2003) Shareholders holding privileged non-voting shares and the members of the board of directors, or of the supervisory board and managing board as the case may be, where such members are not shareholders, shall participate in general meeting proceedings without the right to vote.
(3) (New, SG No. 58/2003) Where a company has more than 50 employees, they shall be represented in the general meeting by one person with a consultative vote. Their proxy shall have the rights referred to in Article 224.
Competence
Article 221
The general meeting shall:
1. amend the Articles of Association;
2. resolve on increase or reduction of the capital stock;
3. resolve on transformation and dissolution of the company;
4. (amended, SG No. 58/2003) elect and recall the members of the board of directors, or of the supervisory board as the case may be;
5. (new, SG No. 58/2003) determine the remuneration of the members of the supervisory board, or of the board of directors as the case may be, who will not be assigned the company's management, including their right to receive a part of the company's profits, and to acquire shares in and debentures of the company;
6. (renumbered from Item 5, SG No. 58/2003) appoint and dismiss CPA auditors;
7. (renumbered from Item 6, supplemented, SG No 58/2003) approve the annual financial statement as certified by the appointed certified auditor, make decisions concerning profit allocation, replenishment of the Reserve Fund and paying out dividends;
8. (renumbered from Item 7, SG No 58/2003) resolve on issuing of debentures;
9. (renumbered from Item 8, SG No 58/2003) appoint liquidators upon dissolution of the company, except in the event of bankruptcy;
10. (renumbered from Item 9, SG No 58/2003) relieve of responsibility the members of the supervisory board and managing board, or of the board of directors as the case may be;
11. (renumbered from Item 10, SG No 58/2003) resolve on other matters which by virtue of the law or the Articles of Association are in its competence.
Holding of General Meeting
Article 222
(1) (Amended and supplemented, SG No. 58/2003) A general meeting of shareholders shall be held at least once a year at the seat of the company, unless its articles of incorporation stipulate another location on the territory of the Republic of Bulgaria.
(2) (New, SG No. 58/2003) The first general meeting shall be held within 18 months of incorporation and subsequent regular meetings shall be held not later than 6 months after the end of the reporting year.
(3) (New, SG No. 84/2000, renumbered from Paragraph 2, SG No 58/2003) Should losses exceed one half of the capital, a general meeting shall be held not later than three months of establishing the losses.
(4) (Renumbered from Paragraph 2, SG No 84/2000, renumbered from Paragraph 3, SG No 58/2003) The general meeting shall elect a chairman and a secretary of the meeting, unless the Articles of Association provide otherwise.
Convening the General Meeting
Article 223
(1) (Amended, SG No. 58/2003) The general meeting shall be convened by the board of directors, or by the managing board as the case may be. A general meeting may also be convened by the supervisory board, as well as on the request of the owners which have held, for more than 3 months, shares representing at least 5 per cent of the stock.
(2) (Amended, SG No. 33/1999, amended and supplemented, SG No. 58/2003) Where within one month following the request of shareholders - holders of at least 5 per cent of the capital, pursuant to paragraph (1), such request has not been granted, or if a General Meeting has not been held within 3 months after submission of such request, the District Court shall call a General Meeting or shall authorize the shareholders who requested the Meeting, or a representative thereof, to call a Meeting. The fact that the stock has been held for more than 3 months shall be established before the court under a notarized statement of certification.
(3) (Amended, SG Nos. 100/1997, 84/2000, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The general meeting shall be convened by notice posted in the Commercial Register. If no bearer shares are issued, the Statutes may provide that the general meeting is convened only by invitations in writing.
(4) As a minimum the notice shall state:
1. the trade name and seat of the company;
2. the place, date and hour of the meeting;
3. the type of general meeting;
4. the formalities, if provided for in the Articles of Association, to be satisfied for attendance and exercise of the right to vote;
5. (amended, SG No. 61/2002) the agenda and business to be transacted, and specific proposals for resolutions.
(5) (Amended, SG No. 100/1997, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The time period from the posting in the Commercial Register until the opening of the meeting shall be no less than 30 days.
Including Items in the Agenda
Article 223a
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Shareholders who for more than three months have owned shares representing at least 5 percent of the Company capital stock can, following the posting a notice in the Commercial Register or the sending out of invitations, also include other subjects on the General Meeting agenda.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Not later than 15 days prior to the opening of the General Assembly the persons as per par. (1) shall file with the Commercial Register a list of the items to be included in the agenda, together with any motions for decisions. By virtue of being posted in the Commercial Register, said issues shall be considered as listed on the proposed agenda.
(3) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The fact that the stock has been held for more than 3 months shall attested to by a declaration.
(4) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Not later than on the next business day following the posting the shareholders shall submit the list of the items, any motions for decisions and the written materials related to those at the registered seat and management address of the company. Article 224 shall also apply accordingly.
Right to Information
Article 224
(1) (Previous Article 224, amended SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) All papers relative to the agenda of a general meeting must be placed at the disposal of the shareholders not later than the date of posting the announcement or mailing of the notice thereof.
(2) (New, SG No. 58/2003) Where the agenda includes the election of members of the board of directors, or of the supervisory board as the case may be, the papers referred to in paragraph (1) shall also include data concerning the names, permanent addresses and professional qualifications of persons nominated for board membership. This rule shall apply also when the item has been included in the agenda following the procedure set out in Article 223a
(3) (New, SG No. 58/2003) Such papers shall be available free of charge to any shareholder on demand.
List of Participants
Article 225
A list shall be drawn up of the shareholders or proxies present at the meeting, and the respective number of shares owned or represented. The shareholders or proxies shall certify their presence at the meeting by signature. The list shall be authenticated by the chairman and the secretary of the meeting.
Proxy
Article 226
A shareholder shall have the right to attend a general meeting by proxy executed in writing.
Quorum of Shareholders
Article 227
(1) (Previous Article 227, amended, SG No. 58/2003) The Articles of Association may provide for a quorum of the shareholders.
(2) (New, SG No. 58/2003) Decisions referred to in Article 221, items 1 through 3 may be taken only if at least half of the equity is represented at the general meeting. Articles of incorporation may stipulate a larger quorum requirement as well.
(3) (New, SG No. 58/2003) In the absence of such quorum in the cases referred to in paragraphs (1) and (2) a new meeting date may be set which shall not be sooner than in 14 days, and the general meeting at such latter date shall be valid regardless of the equity represented. The date of such second meeting may be stated in the original notice as well.
Voting
Article 228
(1) Voting rights shall originate upon payment of the contribution, unless otherwise provided in the Articles of Association.
(2) (Amended, SG No. 58/2003) Where a proposed resolution affects the rights of a class of shareholders, the votes shall be taken class by class, whereby quorum and majority requirements shall apply separately for each class.
Conflict of Interest
Article 229
A shareholder may not, either in person or by proxy, vote on:
1. actions brought by the company against it;
2. proceedings to realize the liability of such shareholder to the company.
Majority
Article 230
(1) General meeting resolutions shall be passed by majority vote of the shares represented, unless the law or the Articles of Association provide otherwise.
(2) (Amended, SG No. 58/2003) Resolutions under 221, Items1, 2 and 3 (for termination only), shall require a majority of at least two thirds of the shares represented. The Articles of Association may provide for another, larger majority for these cases.
(3) (New, SG No. 58/2003) Where the law or articles of incorporation stipulate that voting should occur class by class, quorum and majority rules shall apply separately for each class.
Minority
Article 230a
(New, SG No. 84/2000; Repealed, SG No. 58/2003)
Resolutions
Article 231
(1) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The general meeting may not pass resolutions on matters have not been announced pursuant to Articles 223 and 223a, unless all shareholders are present or are represented at the meeting and no one objects to the submission of such matters to debate.
(2) General meeting resolutions shall take effect immediately, unless such effect is deferred.
(3) (Amended, SG Nos. 100/1997, 84/2000, 58/2003) Resolutions to amend or supplement the Articles of Association, or dissolve the company shall take effect after registration in the commercial register.
(4) (New, SG No. 58/2003) Increase or reduction of capital, transformation of the company, election or dismissal of members of the boards, as well as appointment of liquidators shall come into effect after their entry in the Commercial Register.
Minutes
Article 232
(1) The minutes of a general meeting shall be kept in a special book and shall comprise:
1. the place, date and hour of the meeting;
2. the names of the chairman and the secretary, and of the vote tellers;
3. the attendance of the managing and the supervisory board, and of other persons which are not shareholders;
4. the motions made on the substance of the debate;
5. the votes taken and the results thereof;
6. the objections made.
(2) The minutes of the meeting shall be signed by the chairman and the secretary, and by the vote tellers.
(3) Attached to the minutes shall be:
1. the list of participants;
2. the documents relative to the convening of the meeting.
(4) (New, SG No. 58/2003, amended, SG No. 59/2007) Upon the request of a shareholder or a board member, the general meeting session may be attended by a notary public who shall be tasked with preparing the fact-finding memorandum referred to in Article 593 of the Code of Civil Procedure . A transcript of the fact-finding memorandum shall be attached to the minutes of the general meeting.
(5) (Renumbered from Paragraph 4, SG No 58/2003) The minutes and the documents attached thereto shall be kept on file for not less than five years. Any shareholder shall have the right to inspect the file on demand.
Resolutions of a Single Owner
Article 232a
(New, SG No. 84/2000)
A written record shall be drawn up of the resolutions of the single owner of the stock.
Subsection II
General Provisions for the Two Systems of Administration
Terms of Office
Article 233
(1) The members of the board of directors, the supervisory board and managing board shall be elected for not more than a five-year term of office, unless a shorter term is provided for in the Articles of Association.
(2) The members of the first board of directors, or of the first supervisory board as the case may be, shall be elected for not more than a three-year term of office.
(3) Directors may be re-elected for any number of terms.
(4) (New, SG No. 84/2000, supplemented, SG No. 58/2003) The members of the board of directors and of the supervisory board may be also dismissed before the end of the term for which they have been elected.
(5) (New, SG No. 58/2003, amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) A member of the Board may request his/her own removal from the commercial register under a written notice addressed to the company. Within one month of receiving such notice, the company must apply for registration of his discharge in the commercial register. If the company fails to do so, said Board member may declare for registration this circumstance himself and that entry shall be made regardless of whether another person has been elected to replace him.
Directors
Article 234
(1) A director may be any natural person possessing capacity. Where the Articles of Association so provide, a director may be a legal person. In this case the legal person shall designate a representative for performance of its duties on the board. The legal person shall bear unlimited liability and shall be liable jointly and severally with the other directors for the liabilities arising from acts of its representative.
(2) A person may not be a director, if it:
1. (amended, SG No.84/2000) has been a member of a managing or controlling body of a company dissolved on grounds of bankruptcy in the last two years preceding the date of the decision for declaring bankruptcy and there remain unsatisfied creditors;
2. (repealed, SG No. 84/2000);
3. does not meet other requirements provided for in the Articles of Association.
(3) (New, SG No. 58/2003) Board members shall be registered in the commercial register, where they shall present a notarized consent and a statement certifying that no obstacles as referred to in paragraph (2) exist.
Representative Powers
Article 235
(1) The members of the Board of Directors, or of the Managing Board as the case may be, shall represent the company collectively, unless otherwise provided by the Statutes.
(2) The board of directors, or, as the case may be, the managing board subject to approval by the supervisory board, may delegate authority to one or several of its members to represent the company. The authority so delegated may at any time be revoked.
(3) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The names of the authorized representatives of the Company shall be listed in the Commercial Register. For registration they shall present notarized signatures.
(4) (Amended, SG No. 84/2000) Restrictions on the mandate of the board of directors, the managing board or the persons authorized by them pursuant to the paragraph 2 shall not be binding upon third parties.
(5) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The authorization and the revocation thereof shall be binding upon bona fide third parties after registration and publication.
Contracts of the Single Owner
Article 235a
(New, SG No. 84/2000)
Agreements between the single owner and the company, when it is represented by the single owner, shall be concluded in a written form.
Special Rules on Transacting Deals
Article 236
(Amended and supplemented, SG No. 103/1993, amended SG No. 58/2003)
(1) A company's articles of incorporation may provide for certain deals to be transacted upon obtaining the permission of the supervisory board in advance, or upon the unanimous decision of the board of directors, as the case may be. Such restrictions may be imposed also by the supervisory board, or the board of directors, as the case may be.
(2) The following deals may be transacted only upon a decision of the general meeting of shareholders:
1. transfer or provision of the use of the entire commercial enterprise;
2. disposal with assets the total value of which exceeds, in the current year, half of the value of assets of the company as per its most recent audited annual financial statements;
3. assumption of liabilities or provision of collateral to one person or to related parties, the amount of which exceeds, in the current year, half of the value of assets of the company as per its most recent audited annual financial statements.
(3) A company's articles of incorporation may expressly provide that deals referred to in paragraph (2) may be transacted upon a decision of the board of directors, or the managing board, as the case may be. In such a case, its shall be necessary to obtain the unanimous decision of the board of directors, or the permission of the supervisory board in advance, as the case may be.
(4) Any transaction concluded in violation of paragraphs (1) through (3) shall be valid, and the person which has concluded it shall be liable before the company for any damages.
Rights and obligations
Article 237
(Supplemented, SG No. 84/2000, amended SG No. 58/2003)
(1) Board members shall have equal rights and obligations, regardless of any internal division of functions among them and the provision of management and representation rights to any of them.
(2) Board members must perform their functions with the care of a good merchant and in the interest of the company and of all shareholders.
(3) A person nominated for member of a board must, prior to his election, notify the general meeting of shareholders, or the supervisory board, as the case may be, of his participation in any companies as an unlimited liability partner, of holding over 25 per cent of the equity in any other company, and of his participation in the management of other companies or cooperatives as a procurator, manager or board member. When these circumstances should arise after such person has been elected to the board, he must issue a written notice forthwith.
(4) Members of the board of directors and the managing board shall not have the right, on their own behalf or on behalf of another, to execute business transactions, participate in companies as procurators, managers or board members of other companies or cooperatives when thus engaging in a competitive activity vis-а-vis the company. This restriction shall not apply if the articles of association allow it expressly, or where the body which elects the board member has given its express consent.
(5) Board members shall not disclose any information they have become aware of in that capacity, if that could affect the activity and development of the company, including after they are no longer board members. This obligation shall not apply to information which, pursuant to a law, is accessible to third parties or has already been disclosed by the company.
(6) Paragraphs (1) through (5) shall apply also to natural persons who represent legal persons that are board members, in accordance with Article 234, paragraph (1).
Quorum and Majority
Article 238
(1) The boards may pass resolutions if at least half the directors are present, whether in person or represented by another director. No director present may represent more than one absent director.
(2) Resolutions shall be passed by a simple majority, unless otherwise provided by the Articles of Association.
(3) The Articles of Association may provide that the board may pass resolutions in absentia if all directors have stated in writing their approval for the resolution.
(4) (New, SG No. 58/2003) Not later than the beginning of a session, a board member shall be obliged to notify in writing its chairman that he, or a party related to him, has an interest in an item raised for discussion and shall not participate in decision-making on that issue.
Minutes
Article 239
(Supplemented, SG No. 58/2003)
Minutes shall be kept of all resolutions of the managing board, the supervisory board and the board of directors which shall be signed by all present members of the respective board, whereas the way in which each of them has voted on the issues under discussion shall be noted.
Liability
Article 240
(1) The directors shall deposit a guarantee for their management of the affairs of the company in an amount determined by the general meeting, but not less than their three month gross income. The guarantee may be in the form of shares or debentures deposited with the company.
(2) The directors shall be liable jointly and severally before the company for any damages caused through a fault of theirs.
(3) Any director may be held harmless if it is established that it has no fault for the damage suffered by the company
Liability upon the Request of Shareholders
Article 240a
(New, SG No. 58/2003)
Shareholders holding at least 10 per cent of the company's equity may file a claim demanding that members of the board of directors, or the supervisory board or managing board, as the case may be, be held liable for damages caused to the company.
Contracts with Board Members and Parties Related to Them
Article 240b
(New, SG No. 58/2003)
(1) Board members shall be obliged to notify in writing the board of directors, or the managing board, as the case may be, when they, or parties related to them, are entering into a contract with the company that goes beyond its usual business or materially deviate from market terms.
(2) Contracts referred to in paragraph (1) shall be executed on the basis of a decision of the board of directors, or the managing board, as the case may be.
(3) Any transaction concluded in violation of paragraph (2) shall be valid, and the person which has concluded it having known or been able to learn that such a decision is not in place, shall be liable before the company for any damages.
Subsection III
Two Tier System
Managing Board
Article 241
(1) The joint-stock company shall be managed by a managing board which shall act under the control of a supervisory board.
(2) The members of the managing board shall be appointed by the supervisory board, which shall determine their remuneration and shall have the right to recall them at any moment.
(3) No person may simultaneously serve on both the managing board and the supervisory board of one company.
(4) (Amended, SG No. 58/2003) The number of members of the managing board shall range between 3 and 9 people and shall be determined by the Articles of Association.
(5) The rules of procedure of the managing board shall be approved by the supervisory board.
(6) (New, SG No. 58/2003) Relations between the company and a member of the managing board shall be dealt with in a management contract. The contract shall be executed in writing on behalf of the company through the chairman of the supervisory board or a member authorized by him.
Supervisory Board
Article 242
(1) The supervisory board may not take part in the management of the company. The supervisory board shall represent the company only in its relationship with the managing board.
(2) (Amended, SG No. 84/2000) The members of the supervisory board shall be appointed by the general meeting of shareholders. Their number may be from three to seven.
(3) The supervisory board shall adopt its own rules of procedure and shall appoint a chairman and vice chairman from among its members.
(4) (New, SG No. 58/2003) The supervisory board shall meet for regular sessions at least once every three months.
(5) (Renumbered from Paragraph 4, SG No 58/2003) The chairman shall call meetings of the supervisory board on his own initiative, as well as upon request by the members of the supervisory board or the members of the managing board.
(6) (New, SG No. 58/2003) Relations between the company and a member of the supervisory board shall be dealt with in a contract. The contract shall be executed on behalf of the company through a person authorized by the general meeting of shareholders or by the sole owner.
Reporting and Supervision
Article 243
(1) (Supplemented, SG No. 58/2003) The managing board shall report on its activity to the supervisory board at least once every three months. The report shall also contain the relevant data as specified in Article 247, paragraphs (2) and (3).
(2) The managing board shall immediately inform the chairman of the supervisory board of all circumstances which have arisen which are material to the company.
(3) The supervisory board may at any time require that the managing board provide information or a report on any matter concerning the company.
(4) (Supplemented, SG No. 58/2003) The supervisory board may carry out any necessary investigations in performance of its duties, whereas its members shall have access to all the necessary information and documents. For purposes of such investigation it may employ the services of experts.
Subsection IV
One Tier System
Board of Directors
Article 244
(1) (Amended, SG No. 84/2000) The company shall be managed and represented by a board of directors. The board of directors shall consist of minimum three and maximum nine directors.
(2) The board of directors shall adopt its own rules of procedure and shall elect a chairman and vice chairman from among its members.
(3) The board of directors shall meet regularly not less than once every three months to discuss the company's state of affairs and prospects for development.
(4) (Amended, SG No. 58/2003) The board of directors shall assign the management of the company to one or several executive members elected from among its members, and shall determine their remuneration. Executive members shall be fewer than the remaining members of the board.
(5) Each of the officers must immediately inform the chairman of the board of all circumstances which have arisen which are material to the company.
(6) Each director may request that the chairman call a meeting to discuss particular matters.
(7) (New, SG No. 58/2003) Relations between the company and an executive member of the board shall be dealt with in a management contract which shall be executed in writing on behalf of the company through the chairman of the board of directors. Relations with the remaining members of the board shall be dealt with in a contract which shall be executed on behalf of the company through a person authorized by the general meeting of shareholders or by the sole owner.
Section X
Annual Closing of Accounts and Distribution of Profits

Documents
Article 245
(Amended, SG No. 105/2006)
Each year not later than March 31 the board of directors, or the managing board as the case may be, shall draw up the annual activity report and the financial statement for the previous calendar year, and shall submit these to the certified public accountants appointed by the general meeting.
Reserve Fund
Article 246
(1) The company shall set up a reserve fund.
(2) The sources of financing the reserve fund shall be:
1. At least one tenth of profit which shall be set aside until the fund's assets reach one tenth or more of the company's capital stock or such other larger proportion as the Articles of Association may provide;
2. the proceeds obtained in excess of the nominal value of shares and debentures upon their issuing;
3. the total of the additional payments made by the shareholders for preferences given them with shares;
4. other sources provided for by the Articles of Association or by a general meeting resolution.
(3) Disbursements from the reserve fund may be made only for:
1. covering losses for the current year;
2. covering losses for the previous year.
(4) When the assets of the reserve fund exceed one tenth of the company's capital stock, or any other larger proportion thereof as may be provided for in the Articles of Association, the excess amount may be used for increase of the capital stock.
Contents of Annual Report
Article 247
(1) (Previous Article 247, SG 58/2003, SG No. 105/2006) The annual activity report shall comprise a review of the company's activity over the year and its current state of affairs, and the accounting notes to the annual financial statement.
(2) (New, SG No. 58/2003) It shall be obligatory to indicate the following in the activity report:
1. the sum total of remunerations paid out to members of the boards during the year;
2. company shares and debentures acquired, held and transferred by members of the boards during the year;
3. rights of members of the boards to acquire shares and debentures in the company;
4. participation of members of the boards in any companies as unlimited liability partners, holdings of over 25 per cent of the equity in any other company, and their participation in the management of other companies or cooperatives as procurators, managers or board members;
5. contracts referred to in Article 240b executed during the year.
(3) (New, SG No. 58/2003) The report shall also state the business policy planned for the following year, including anticipated investments and personnel development, anticipated return from investments and development of the company, and any forthcoming transactions of material significance for the company's operations.
Pay-out of Dividends and Interest
Article 247a
(New, SG No. 84/2000)
(1) (Amended, SG No. 58/2003) Dividends and interest pursuant to article 190. Paragraph 2 shall be paid out only if the respective annual financial statement, audited and adopted according to Section XI, shows that the net worth of the property reduced by the amount of dividends and interest to be paid-out is not less than the amount of the company's capital, "Reserve" fund and the other funds the company may be obliged to form by the Articles of Association or by law.
(2) (Amended, SG No. 58/2003) Within the meaning of paragraph 1, the net worth of the property is the difference between the company's assets and liabilities according to its balance sheet.
(3) The payments under paragraph 1 shall be made up to the amount of the profit for the current year, the undistributed profits from previous years, the part of the "Reserve" fund and the other funds of the company in excess of the minimum set by law or the Articles of Association, reduced by the uncovered losses from previous years and the allowances for the `Reserve" fund and the other funds the company is obliged to form by law or the Articles of Association.
(4) If payments have been made without the prerequisites under paragraphs 1-3, the shareholders are not obliged to return the received amounts unless the company proves that the shareholders have know or could have known about the lack of prerequisites.
(5) (New, SG No. 58/2003) The company shall be obliged to pay out the dividend to its shareholders as voted by the general meeting within three months of holding such meeting unless a longer period is stipulated in its articles of incorporation.
Section XI
Annual Audit

Object and Scope of Audit
Article 248
(1) The annual financial statement shall be audited by the certified public accountants appointed by the general meeting.
(2) The audit shall have as its object to ascertain whether the provisions of the Accountancy Act and the Articles of Association on annual closing have been observed.
Appointment and Responsibility of Certified Public Accountants
Article 249
(1) Where the general meeting has failed by the end of the calendar year to appoint Certified Public Accountants, the Court shall, upon request of the board of directors, or of the managing or the supervisory board as the case may be, or of an individual shareholder appoint Certified Public Accountants.
(2) The Certified Public Accountants shall assume responsibility for the bona fide and unbiased performance of audit, and nondisclosure of secrets.
Report of Certified Public Accountants
Article 250
(Amended, SG No. 105/2006)
Upon receipt of the report of the Certified Public Accountants, the managing board shall submit it to the supervisory board, together with the annual financial statement and annual activity report. The managing board shall also submit the draft resolution on distribution of profit to be discussed by the general meeting.
Approval of Annual Closing of Accounts
Article 251
(1) The supervisory board shall verify the annual financial statement, the annual report and the draft on distribution of profit, and shall, upon approval thereof, resolve to call a regular general meeting of shareholders.
(2) In the one-tier system the draft on distribution of profit shall be prepared by the board of directors, which shall then convene the general meeting.
(3) (Supplemented, SG No. 58/2003) The annual financial statements may not be approved by the general meeting without an audit by certified public accountants. The certified public accountants shall participate in the session of the supervisory board, or the board of directors, as the case may be, as stipulated in paragraphs (1) and (2).
(4) (Amended, SG No. 84/2000, amended and supplemented, SG 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The verified and adopted annual financial statement shall be submitted for posting at the Commercial Register.
Examination at the Request of Shareholders
Article 251a
(New, SG No. 58/2003)
(1) Shareholders holding at least 10 per cent of the company's equity may request the general meeting to appoint an examiner tasked to examine the annual financial statements.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Should the general meeting fail to adopt a decision to appoint a examiner, the shareholders referred to in paragraph (1) may request the appointment of one from the regional court in the region of which the company's seat is located.
(3) The appointed examiner shall prepare a report of his findings which shall be presented at the next general meeting.
(4) The cost of the examination shall be at the expense of the company.
Section XII
Termination

Grounds for Dissolution
Article 252
(1) (Previous Article 252, SG No. 58/2003) A joint-stock company shall be dissolved:
1. by resolution of the general meeting of shareholders;
2. upon the expiration of the time period for which it was formed. The general meeting may pass a resolution to dissolve the company prior to the expiration of the said period;
3. upon a declaration of bankruptcy;
4. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) by a ruling of the court with which the company is registered upon an action brought by the public attorney where the company pursues objectives prohibited by law;
5. (amended, SG No. 58/2003) when the net worth of the company referred to in Article 247a, paragraph (2) drops below the amount of the registered capital; if within a period of one year the general meeting fails to pass a resolution to reduce capital, to transform or terminate the company, the termination shall be effected pursuant to Item 4;
6. (new, SG No. 58/2003) if for a period of 6 months the number of members of a board of the company has been less than the minimum number specified in the law, it may be terminated following the procedure set out in Item 4;
7. (renumbered from Item 6, SG No 58/2003) upon the occurring of the grounds provided for in the Articles of Association.
(2) (New, SG No. 58/2003) A sole-owner joint-stock company shall not terminate upon the death or termination of the sole owner of its equity.
CHAPTER FIFTEEN
PARTNERSHIP LIMITED BY SHARES

Definition
Article 253
(1) A partnership limited by shares shall be formed by articles of incorporation, whereby limited partners are issued with shares against their contributions to the capital. The limited partners shall be not less than three.
(2) The provisions for the joint-stock company shall apply mutatis mutandis to the partnership limited by shares, unless this chapter provides otherwise.
(3) The trade name of a partnership limited by shares shall include the extension, "Komanditno druzhestvo s aktsii" [Partnership limited by shares], or the abbreviation "KDA".
Founders
Article 254
(1) The partnership limited by shares shall be formed by the general partners. They shall have the right to select shareholders among subscribers.
(2) The general partners shall draw up the Articles of Association and shall convene the constituent meeting.
Contributions
Article 255
(1) The amount of the partners' contributions shall be specified by the Articles of Association.
(2) (Repealed, SG No. 103/1993).
Partnership Organs
Article 256
The organs of the partnership limited by shares shall be those set forth by this Act for a one-tier system joint-stock company.
General Meeting
Article 257
(1) Only limited partners shall have the right to vote in the general meeting. General partners, even when they own shares, shall take part in the meeting in a consultative capacity.
(2) The powers of the general meeting shall be set forth in the Articles of Association.
(3) The general meeting shall submit to consideration and resolve on the requests of limited partners for auditing the activities of the partnership.
Board of Directors
Article 258
The board of directors shall consist of the general partners.
Adoption and Amendment of the Articles of Association
Article 259
(1) The Articles of Association shall be adopted and amended, and the partnership shall be dissolved, subject to the consent of the general partners.
(2) The partnership shall not be dissolved with the death or bankruptcy of a limited partner, unless the Articles of Association provide otherwise.
Liquidation Proceeds
Article 260
The liquidation proceeds of each partner shall be proportionate to its contributions in the partnership.
CHAPTER SIXTEEN
(Amended and supplemented, SG No. 58/2003 - effective 01.01.2004)
TRANSFORMATION OF COMPANIES
Section I
General Provisions

Forms of Transformation
Article 261
(Amended and supplemented SG No. 103/1993, amended, SG No. 84/2000,
No 58/2003)
(1) Companies may be transformed by take-over, merger, splitting, spinning off and spinning off of a sole-owner company, and by changing their legal form.
(2) In all forms of transformation, the transforming, receiving and newly established companies (the companies involved in the transformation) may differ in their type, unless otherwise provided for in a law.
(3) A sole-owner company may transform also by transferring its entire property to the sole owner if that owner is a natural person.
Transforming a Company in Liquidation and in Bankruptcy
Article 261a
(New, SG No. 58/2003)
(1) A company in liquidation may transform under the procedure set out in this chapter if it satisfies the conditions specified in Article 274, paragraph (1).
(2) A company for which bankruptcy proceedings have been initiated may transform if the reorganisation plan envisages that it continue its operations. The rules of this chapter shall apply to such transformation.
Exchange Ratio
Article 261b
(New, SG No. 58/2003)
(1) In a transformation, partners or shareholders in transforming companies shall become partners or shareholders in one or more of the newly established and/or receiving companies. Interest stakes or shares acquired after the transformation must be equivalent to the fair price of interest stakes or shares held prior to the transformation in the transforming company.
(2) To attain an equivalent exchange ratio, cash payments may be made to partners or shareholders in an amount not to exceed 10 per cent of the aggregate nominal value of the interest stakes or shares acquired.
(3) (New, SG No. 66/2005) No shares or stakes in a receiving or a newly formed company may be acquired in exchange of shares or stakes in the transforming company, owned by the receiving company, nor against own shares of the transforming company. This prohibition shall also be valid in regard to persons operating in their own name, but on the account of the company.
Liability of Members of Managing Bodies
Article 261c
(New, SG No. 58/2003)
Members of managing bodies of the transforming and receiving companies shall be liable to the partners and shareholders in the company for any damages resulting from a failure to fulfil their duties in preparing and effecting the transformation.
Retaining Third Party Rights
Article 261d
(1) (New, SG No. 58/2003) In a transformation, any existing pledges and attachments on interest stakes and shares in the transforming companies shall transfer onto the interest stakes and shares in the receiving and/or newly established companies acquired in exchange.
(2) The pledges and attachments being transferred shall be registered ex officio or on the request of creditors in the commercial register or in the book of shareholders maintained by the company or by the Central Depositary.
Section II
Transformation by Take-Over, Merger, Splitting, Spinning Off

Take-Over
Article 262
(Amended, SG No. 58/2003)
(1) In case of a take-over, the entire property of one or more companies (transforming companies) is transferred over to one existing company (receiving company), which then becomes their legal successor. Transforming companies shall be terminated without liquidation.
(2) In the case referred to in paragraph (1), it shall not be possible to effect a simultaneous change in the legal form of the receiving company.
Merger
Article 262a
(New, SG No. 52/1998, amended, SG No. 58/2003)
In case of a merger, the entire property of two or more companies (transforming companies) is transferred over to one newly established company, which then becomes their legal successor. Transforming companies shall be terminated without liquidation.
Splitting
Article 262b
(New, SG No. 58/2003)
(1) In case of a splitting, the entire property of one company (transforming company) is transferred over to two or more companies, which then become its legal successors for the respective part. The transforming company shall be terminated without liquidation.
(2) Companies onto which the property of the transforming company is transferred may be existing companies (receiving companies) in the case of splitting through acquisition, newly established companies in the case of splitting through establishment, and both existing and newly established companies at the same time.
(3) It shall not be possible to effect a change in the legal form of the receiving company simultaneously with the splitting.
Spinning Off
Article 262c
(New, SG No. 58/2003)
(1) In case of a spin-off, part of property of one company (transforming company) is transferred over to one or more companies, which then become its legal successor for that part of the property. The transforming company shall not be terminated.
(2) Companies onto which the part of the property of the transforming company is transferred may be existing companies (receiving companies) in the case of spinning off through acquisition, newly established companies in the case of spinning off through establishment, and both existing and newly established companies at the same time.
(3) It shall not be possible to effect a change in the legal form of the receiving company or of the receiving company simultaneously with the spinning off.
Spinning Off a Sole-Owner Company
Article 262d
(New, SG No. 58/2003)
(1) In case of a spin-off of a sole-owner company, part of property of one company (transforming company) is transferred over to one or more sole-owner limited liability companies or sole-owner joint-stock companies (newly-established companies), whereby the transforming company then become the sole owner of their capital. This transformation may be effected simultaneously with a spin-off as referred to in Art. 262c.
(2) To cases of spinning off a sole-owner company, the rules for spinning off by establishment shall apply, to the extent that this Act does not provide otherwise.
Transformation Agreement and Transformation Plan
Article 262e
(New, SG No. 58/2003)
(1) Prior to taking a decision to transform, the receiving and/or transforming companies involved in such transformation shall enter into a transformation agreement.
(2) The transformation agreement may be concluded also after the decision has been taken. In such a case the transforming and receiving companies shall prepare a draft agreement to which all rules concerning the transformation agreement shall apply. In the meaning of this section, the date of the draft agreement shall be considered to be a date of the transformation agreement.
(3) In case of splitting by establishment, spinning off by establishment and spinning off of a sole-owner company, no agreement needs to be concluded. In this case, the transforming company shall prepare a transformation plan.
Form of the Transformation Agreement and Plan
Article 262f
(New, SG No. 58/2003)
(1) The transformation agreement shall be executed by the persons representing the company, in writing, with notarized signatures.
(2) Where a draft agreement is prepared, it must be drawn up in writing with notarized signatures of the persons representing each of the transforming and receiving companies.
(3) The transformation plan shall be drawn up in writing with notarized signatures of the persons from the governing body of the company or of the partners with management rights in a personal company.
Contents of the Transformation Agreement and Plan
Article 262g
(New, SG No. 58/2003)
(1) The transformation agreement deals with the method in which transformation is to be effected.
(2) The transformation agreement shall contain, as a minimum, the following:
1. (supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) the legal form or, respectively, the trade name, the standard identification code, as well as the address of each of the transforming and receiving companies ;
2. the exchange ratio of the shares or interest stakes as determined as of a specific date;
3. the amount of cash payments, if any have been envisaged pursuant to Article 261b, paragraph (2), and the time period within which payment must be made;
4. a description of the interest stakes, shares or membership which each partner or shareholder acquires in the newly established and/or receiving companies;
5. conditions regarding the distribution and transfer of shares in the newly established and/or receiving companies;
6. the point in time as of which participation in the newly established and/or receiving company entitles to a share in the profits, and any specific terms related to such entitlement;
7. the point in time as of which any action of the transforming companies shall be deemed effected for the account of the newly established or receiving companies for accounting purposes;
8. the rights which the newly established or receiving companies grant to shareholders with special rights and to holders of securities other than shares;
9. any privilege granted to the examiners referred to in Article 262m or to members of the governing and control bodies of companies involved in the transformation.
(3) In addition to the dates referred to in paragraph (2), the transformation plan shall contain also:
1. a precise description and allocation of rights and liabilities from the property of the transforming company which are transferred onto each newly established company;
2. distribution of interest stakes, shares and membership in the newly established and/or transforming companies among partners or shareholders in the transforming companies and the criterion for such distribution.
(4) The exchange ratio shall be determined as of a date which cannot precede by more than 6 months the date of the transformation agreement or plan, nor be later than the date of the transformation agreement or plan.
Effect of the Transformation Agreement
Article 262h
(New, SG No. 58/2003)
(1) The transformation agreement shall take effect as from the time of its execution for each of the transforming and receiving companies. Where the agreement is not approved under the decision to transform any one of the participating companies, it shall be terminated. No liability for damages can be claimed in such a case.
(2) Prior to the decision to transform, the agreement can be terminated by the governing body of the company. After the decision has been taken and prior to the registration of the transformation, the agreement can be terminated only by a decision taken by the respective majority vote as referred to in Article 262q.
Report of the Governing Body
Article 262i
(New, SG No. 58/2003)
(1) The governing body of each of the transforming and receiving companies shall prepare a written report on the transformation. For personal companies, the report shall be drawn up by the partners with management rights.
(2) (Suplemented, SG No. 66/2005) The report referred to in paragraph (1) shall contain a detailed legal and economic rationale for the transformation agreement or plan, and particularly concerning the exchange ratio, and in the case of splitting of spinning off, concerning the criterion for distributing interest stakes and shares. The report must state data about the appointed examiner and the authorized depositary as referred to in Article 262x, and the difficulties that have emerged in the evaluation, if any. Where the newly established company is a capital company or an increase of the capital of the receiving company is to be performed, the report shall also contain data on the property, passing to this company, based on which the amount of the capital shall be established in compliance with Article 262r(3) and Article 262t(1).
Presentation of the Agreement, Plan and Report in the Commercial
Register
(Heading amended, SG No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006)
Article 262k
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transformation agreement or plan and the report of the governing body shall be submitted for recordation in the Commercial Register; recordation thereof shall be carried out simultaneously for the merchant files of each transforming or receiving company.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Presentation of the documents referred to in paragraph (1) for the participating equity companies shall be recorded in the Commercial Register not later than 30 days prior to the date of the general meeting convened to take a decision on the transformation.
Examination of the Transformation
Article 262l
(New, SG No. 58/2003)
(1) The transformation agreement or plan and the report of the governing body shall be reviewed by an examiner assigned for the purpose, for each transforming or receiving company.
(2) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The examiner shall be appointed by the governing body or by the managing partners for each transforming or receiving company. Upon the joint request of the managing bodies, the registrar of the Recordation Agency may appoint a joint examiner for all transforming and receiving companies.
(3) The examiner must be a registered auditor. The examiner may not be a person which ahs, over the past two years, been an auditor of the company which is appointing it or which has produced an evaluation of a in-kind contribution. The appointed examiner may not be elected auditor of any of the companies participating in the transformation for two years following the date of the transformation.
(4) The examiner shall be provided with access to any information and written materials referring to any of the transforming and receiving companies which are relevant to the examiner's task.
Examiner's Report
Article 262m
(New, SG No. 58/2003)
(1) The appointed examiner shall draw up a report from the examination to the partners or the shareholders of the respective company. Where a joint examiner has been appointed, he shall prepare a joint report for all the companies.
(2) The examiner' s report must include an assessment of whether the exchange ratio envisaged in the transformation agreement or plan is adequate and reasonable and indicate:
1. methods used in determining the exchange ratio;
2. the extent to which the use of these methods is appropriate and proper in that particular case;
3. the values obtained when using each method, and the relative significance of each method in determining the value of the shares or interest stakes;
4. particular difficulties in the evaluation, if any.
(3) The examiner shall be liable to all companies participating in the transformation and to their partners and shareholders for any damages due to a non-performance of his obligations.
Obligation to Provide Information
Article 262n
(New, SG No. 58/2003)
(1) Prior to making the decision concerning the transformation, the following shall be made available to the partners and the shareholders:
1. the transformation agreement or plan;
2. the report of the governing body;
3. the examiner's report;
4. the annual financial statements and the activity reports of all transforming and receiving companies for the past three financial years, if any;
5. the balance sheet as of the last of the month preceding the date of the transformation agreement or plan, unless the most recent annual financial statements refer to a financial year ended less than 6 months prior to that date;
6. drafts of a new membership agreement or articles of incorporation of each of the newly established companies, or draft amendments to the articles of incorporation or membership agreement of each of the transforming and receiving companies, respectively.
(2) The papers referred to in paragraph 1 shall be made available at the seat and address of equity companies within 30 days prior to the date of the general meeting. On request, a copy of the papers or summaries of these shall be made available to each partner or shareholder free of charge.
(3) The time period referred to in paragraph 2 does not need to be observed if all partners or shareholders have voted for the transformation.
(4) The governing bodies of each of the transforming or receiving companies shall be obliged to inform the general meeting of the partners or shareholders of any change in the property rights and obligations that has occurred between the drawing up of the transformation agreement or plan and the day of the general meeting. The governing bodies of the other transforming or receiving companies shall also be informed of such change, which shall be obliged to inform the general meetings of their companies.
Decision to Transform
Article 262o
(New, SG No. 58/2003)
(1) The decision to transform shall be taken separately for each transforming or receiving company.
(2) Under the decision to transform, the transformation agreement or plan shall also be approved.
(3) If the general meeting has approved a draft transformation agreement, the governing body of the company shall be obliged to execute it only if this is expressly stipulated in the decision.
(4) Under the decision to transform, the decisions envisaged in this section concerning all changes related to the transformation shall also be adopted.
Majority Requirement in Taking the Decision to Transform
Article 262p
(New, SG No. 58/2003)
(1) A transformation of a general partnership or a limited partnership company shall be done upon the agreement of all partners given in writing with notarization of the signatures.
(2) The decision to transform a limited liability company shall be taken by the general meeting of the partners by a majority vote of the capital.
(3) The decision to transform a joint-stock company shall be taken by the general meeting of the shareholders by a majority vote of the represented shares with voting power. In case of shares from different classes, the decision shall be taken by the shareholders from each class.
(4) To transform a partnership limited by shares, it is necessary to have a decision of the unlimited liability partners taken unanimously in writing with notarization of the signatures, and a decision of the general meeting of the shareholders taken by a majority vote of the represented shares with voting power.
Consent to Transform
Article 262q
(New, SG No. 58/2003)
(1) Where as a result of a transformation a partner in a limited liability company or a shareholder becomes an unlimited liability partner, it is necessary to obtain his express consent.
(2) The consent shall be considered to be given if the partner or shareholder has voted for the decision to transform. In this case the general meeting shall be attended by a notary public who shall draw up a memorandum establishing facts as referred to in Article 488a of the Code of Civil Procedure , a transcript of which shall be attached to the minutes from the general meeting.
(3) If a partner or shareholder has not taken part in the taking of the decision, his consent may be given in writing with a notarization of the signature.
Newly Established Company
Article 262r
(New, SG No. 58/2003)
(1) If in a transformation a new company is being established, under the decision of each of the transforming companies the membership agreement and/or articles of incorporation of each of the newly established companies shall be adopted and bodies shall be elected.
(2) With the adoption of the decision referred to in paragraph 1, the requirements concerning the form of the membership agreement or articles of incorporation shall be considered met.
(3) The size of the capital of a newly established company may not be larger than the net worth of the property being transferred onto the company in the transformation. Article 262t, paragraph 3 shall also apply, accordingly.
(4) For the newly established company the rules for that specific type of company shall respectively apply.
Amendment to the Membership Agreement or Articles of Incorporation
Article 262s
(New, SG No. 58/2003)
(1) Amendments to the membership agreement and/or articles of incorporation of a receiving company which are being made in the course of the transformation shall be adopted under the decision of each of the transforming companies and under the decision of that receiving company.
(2) Amendments to the membership agreement and/or articles of incorporation of a transforming company shall be adopted under the decision to transform it.
(3) With the adoption of the decision referred to in paragraphs 1 and 2, the requirements concerning the form of the membership agreement or articles of incorporation shall be considered met.
Increase of Capital
Article 262t
(New, SG No. 58/2003)
(1) The capital of a receiving company shall be increased for the purposes of effecting the transformation to the extent that is necessary in order to set up new interest stakes or shares for the partners and the shareholders of the transforming companies. The amount of the increase may not be larger than the net worth of the property that is being transferred onto that company in the transformation.
(2) No increase of capital of a receiving company may be effected when:
1. it holds its own shares, or
2. a transforming company holds shares in the receiving company and they have been fully paid in.
(3) No increase of capital of a receiving company may be effected when:
1. it holds shares in a transforming company;
2. a transforming company holds its own shares, or
3. a transforming company holds shares in the receiving company and they have not been fully paid in.
Examination of Capital
Article 262u
(New, SG No. 58/2003)
(1) Where in a transformation an equity company is being established or an increase of capital of a receiving company is being effected, the examiners of all companies shall prepare, in addition to the report referred to in Article 262m, a joint report in which they shall check whether the conditions specified in Article 262r, paragraph 3 and Article 262t, paragraph 1 have been met.
(2) The net worth of the property shall be established as the difference between the fair price of the rights and the obligations which, in the transformation, are transferred onto the newly established or receiving company.
(3) In cases referred to in paragraph 2, the rules on equity contributions shall not apply.
Reduction of Capital
Article 262v
(New, SG No. 58/2003)
(1) If in a spinning off a reduction of the capital of the transforming company is effected, no payments to the partners and the shareholders may be made. The rules on protection of creditors shall not apply.
(2) Paragraph 1 shall apply also where a receiving company reduces its capital for the purposes of effecting the transformation.
Holders of Special Rights
Article 262w
(New, SG No. 58/2003)
(1) Holders of securities which are other than shares and give special rights must be provided with equivalent rights in the receiving or newly established companies after the transformation.
(2) To the submission of securities referred to in paragraph 1, Article 262x shall apply.
(3) Paragraph 1 shall not apply in case that the meeting of the holders of these securities, if one is provided for by the law, has agreed to the change of the rights attached to them or each holder has separately given his consent to change his right or may present his security holdings for redemption.
Submission of the Shares
Article 262x
(New, SG No. 58/2003)
(1) After a decision to transform has been taken by all participating companies, the governing body of a receiving or newly established joint-stock company or partnership limited by shares shall submit to a depositary the temporary certificates or the shares which must be received by the partners or the shareholders of the transforming companies.
(2) The depositary shall be a natural or a legal person authorized by the governing body of a separate transforming company. To relations between the depositary and the partners or the shareholders of the transforming company, the rules of an order contract shall apply. The depositary shall not exercise the rights attached to the shares submitted to him.
(3) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Following registration as per Article 263c, paragraph 1 and Article 263d, paragraph 1, the depositary shall be obliged to submit, within two months, the temporary certificates or the shares to the shareholders.
(4) Any temporary certificates or shares not received within the time period set in paragraph 3 shall be returned to the managing body or the receiving or newly established company. Any bearer's shares not claimed within a period of one year shall be sold by the managing body whereas the rights of those which had been their holders shall be extinguished and proceeds shall be posted to the Reserve Fund. The one-year time period shall commence as from the expiry of the time period referred to in paragraph 3.
(5) Where the partners or the shareholders of the transforming companies have to receive dematerialised shares, the governing body of a receiving or newly established company shall state before the Central Depositary the registration of the issue of shares, including the opening of accounts or the transfer of shares already issued. After the registration referred to in Article 263c, paragraph 1 and Article 263d, paragraph 1, the Central Depositary shall register the issue and distribute the shares among the accounts or register the transfer of the shares.
Exchange of Bearer's Shares
Article 262y
(New, SG No. 58/2003)
(1) Holders of bearer's shares in a transforming company shall be named in the list of persons acquiring interest stakes, shares or membership in a newly established or receiving company, in the book of the shareholders kept by the company or by the Central Depositary, or in the commercial register, with an indication of the class and the numbers of shares held by them.
(2) Where a holder of bearer's shares, prior to the declaration of the transformation for registration purposes, should deposit his shares with the company, he shall be indicated by name in the documents referred to in paragraph 1.
(3) After the date of the transformation, any person may request in writing to be indicated by name in the book of the shareholders or in the commercial register by presenting the bearer' s shares held by him. Prior to such time, such person may not exercise the rights attached to the interest stakes, the shares or membership acquired in exchange of the respective bearer's shares, and they shall not be taken into the calculation when determining the necessary quorum and majority.
Filing for the Purposes of Registering a Take-Over or a Merger
Article 263
(Amended, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The governing body of each of the transforming companies shall file, for the purposes of recordation in the Commercial Register, a statement of the take-over or merger. Enclosed with the application for recordation shall be the agreement on transformation and the decisions of all companies participating in the transformation.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) In addition to the documents as per paragraph (1), the following shall be enclosed with the application for recordation:
1. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
2. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
3. a transcript of the membership agreement and/or articles of incorporation of the receiving company, which includes all modifications and amendments, certified by the body which represents the company, if any such modifications and amendments have been made in the transformation;
4. the adopted membership agreement and/or articles of incorporation of the newly established company and the documents necessary for the registration of the bodies elected;
5. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
6. the examiners' reports;
7. the expressions of consent under Article 262q;
8. the list of persons acquiring shares, interest stakes or membership in a newly established or receiving company, the type of membership, and data concerning any existing pledges and attachments;
9. the declaration of the depositories stating that they have been handed over the temporary certificates or the shares, or proof, respectively, that the circumstances referred to in Article 262x, paragraph 5 have been stated before the Central Depository.
(3) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(4) The filing for registration for personal companies shall be made by each of the partners with management rights.
Filing for the Purposes of Registering a Splitting or Spinning-Off
Article 263a
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The governing body of the transforming company shall file for recordation of the splitting or spinning off in the Commercial Register. The following shall be enclosed with the application for recordation:
1. the transformation agreement or plan and the decisions of all companies participating in the transformation;
2. a transcript of the membership agreement and/or articles of incorporation of the receiving company, which includes all modifications and amendments, certified by the body which represents the company, if any such modifications and amendments have been made in the transformation;
3. the adopted membership agreement and/or articles of incorporation of the newly established company and the documents necessary to register its bodies.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) In addition to the documents as per paragraph (1), the following shall be enclosed with the application for recordation:
1. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) ;
2. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) ;
3. a transcript of the membership agreement and/or articles of incorporation of the transforming company, which includes all modifications and amendments, certified by the body which represents the company, if any such modifications and amendments have been made in the transformation;
4. (repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
5. the examiners' reports;
6. the expressions of consent under Article 262q;
7. the list of persons acquiring shares, interest stakes or membership in a newly established or receiving company, the type of membership, and data concerning any existing pledges and attachments;
8. the declaration of the depositories stating that they have been handed over the temporary certificates or the shares, or proof, respectively, that the circumstances referred to in Article 262x, paragraph 5 have been stated before the Central Depository.
(3) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(4) Filing for registration of a personal company shall be made by one or by all partners with management rights.
Time Limit for Filing for Registration
Article 263b
(New, SG No. 58/2003)
(1) The filing referred to in Article 263, paragraph 2 and Article 263а, paragraph 2 may not be made later than 8 months after the date as of which the exchange ratio is established under the transformation agreement or plan. This time period may not be extended or renewed.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) In cases where a law prescribes that permission for the transformation be obtained, in advance, from a government authority, the filing shall be made within the time period referred to in paragraph 1, and such permission shall be presented to the Commercial Register after it has been issued.
Registration of a Take-Over or a Merger
Article 263c
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The registration of a take-over or merger shall be made by the registrar in charge of the company file of the transforming, receiving or, resp., the newly established company, not earlier than 14 days after the date of filing. Subject to recordation shall also be any changes in the articles of association or the statutes, any change in the capital and changes in the persons managing and representing the receiving company, if any have been made in the transformation.
(2) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(3) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
Registration of Splitting and Spinning-Off
Article 263d
(New, SG No. 58/2003)
(1) (Amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The registration of a splitting or spinning off shall be made by the registrar in charge of the company file of the transforming, receiving or, resp., the newly established company, not earlier than 14 days after the date of filing. Subject to recordation shall also be any changes in the articles of association or the statutes, any change in the capital and changes in the persons managing and representing the transforming or receiving company, if any have been made in the transformation. In the event of splitting, the transforming company shall be deleted.
(2) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
(3) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) .
Refusal to Register the Transformation
Article 263e
(New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006) .
Notification of creditors
Article 263f
(New, SG No. 58/2003, amended SG No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006) From the moment of recordation, the creditors shall be deemed to have been notified as to their rights in pertinence to the transformation.
Date of the Transformation
Article 263g
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The transformation shall take effect as of the moment or recordation in the Commercial register.
(2) The transformation agreement or plan may provide for an earlier date as from which the actions of the transforming companies are deemed as done for the account of the newly established or receiving companies for the purposes of accounting. This date may not precede by more than 6 months the date of the transformation agreement or plan.
Closing and Opening Balance Sheets
Article 263h
(New, SG No. 58/2003)
(1) Each transforming company which is being terminated shall draw up a closing balance sheet as of the date of the transformation. A copy of the closing balance sheet shall be handed over to each of the receiving or the newly established companies.
(2) Each newly established company shall draw up an opening balance sheet as of the date of the transformation on the basis of the balance sheet values of the assets and liabilities received through the transformation or on the basis of their fair value.
(3) Where the transformation agreement or plan provides for an earlier date, according to Article 263g, paragraph 2, closing and opening balance sheets shall be drawn up as of such date.
Transformation Effects
Article 263i
(New, SG No. 58/2003)
(1) With the registration of the transformation under Article 263c, paragraph 1, or under Article 263d, paragraph 1, as the case may be, the newly established companies shall arise and the transforming companies be terminated, except for a transforming company in the case of splitting.
(2) With the registration of a take-over or merger, the rights and the obligations of the transforming companies shall transfer onto the receiving or newly established company. The partners and the shareholders in the transforming companies shall become partners or shareholders in the receiving or in the newly established company.
(3) With the registration of a splitting, the rights and the obligations of the transforming company shall transfer onto each receiving and/or newly established company in accordance with the distribution envisaged in the transformation agreement or plan. If a right has not been distributed it shall transfer onto all legal successors in proportion to such part of the net worth of the property that they are entitled to according to the transformation agreement or plan. The partners and the shareholders in the transforming company shall become partners or shareholders in one or more of the receiving or the newly established companies in accordance with the provisions in the transformation agreement or plan.
(4) With the registration of a spinning-off, the rights and the obligations of the transforming company shall transfer onto each receiving and/or newly established company in accordance with the distribution envisaged in the transformation agreement or plan. The partners and the shareholders in the transforming company shall become partners or shareholders in one or more of the receiving or the newly established companies and/or retain their membership in the transforming company in accordance with the provisions in the transformation agreement or plan.
(5) With the registration of a spinning off of a sole-owner company, the part of the rights and the obligations of the transforming company as envisaged in the transformation plan shall transfer onto the newly established company. The transforming company shall become the sole owner of the capital of the newly established company.
(6) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Where the property of a transforming company includes a property right of a real property or a movable asset transactions with which are subject to registration, the certificate of recordation as per Article 263c, paragraph 1 and Article 263d, paragraph 1 shall be submitted for recordation in the respective register. In case of a splitting or spinning off, the court decision shall enclose also the transformation agreement or plan.
(7) In case of a splitting or spinning off, any grandfathered pending proceedings on cases shall continue in the legal successor of the litigant in accordance with the provisions made in the transformation agreement or plan. Where the transforming company is the respondent, the court shall ex officio summon as litigant all companies which are liable jointly and severally, according to Article 263l, paragraphs 1 and 2.
(8) Any permits, licenses or concessions held by the transforming company, when it is terminated, shall transfer onto the receiving or the newly established company in the case of take-over or merger, and in the case of splitting they shall transfer onto the company identified under the transformation agreement or plan, to the extent that a law or the action of award does not provide otherwise.
Protection of Creditors in a Take-Over or Merger
Article 263k
(New, SG No. 58/2003)
(1) (Amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The receiving or the newly established company shall manage separately the property of each of the transforming companies transferred onto them for a period of 6 months from the moment of recordation of the transformation.
(2) Within the time period under paragraph 1 each creditor of a company participating in the transformation whose claim has not been secured and has arisen prior to the date of the transformation may request execution or securitization according to its rights. If the request is not satisfied, the creditor shall be entitled to privileged satisfaction from the rights that used to belong to its debtor.
(3) The members of the governing body of the receiving or the newly established company shall be liable jointly and severally before creditors for the separate management.
Protection of Creditors in Splitting and Spinning-Off
Article 263l
(New, SG No. 58/2003)
(1) Concerning obligations which have arisen prior to the date of the transformation, joint and several liability shall be borne by all companies participating in the transformation except for those terminated. The liability of each company shall be up to the amount of rights received by such company except for the company to which the obligation is allocated under the transformation agreement or plan.
(2) If, in the case of splitting, an obligation has not been distributed, joint and several and unlimited liability for that shall be borne by all receiving and/or newly established companies. Any payment to the creditor shall be borne by them in a proportion to the net worth of the property that they are entitled to according to the transformation agreement or plan.
(3) In cases of splitting and spinning off, when a part of the property transfers onto one or more existing companies, the rules for separate management as referred to in Article 263k shall also apply for each of the receiving companies, respectively.
(4) Where, in case of splitting by establishment, and of spinning off by establishment the amount of the capital of the transforming company has been larger than the total amount of the capital of all newly established companies, creditors with claims that have arisen prior to the date of the transformation may request securitization up to the amount of the difference in the capital. This shall apply also where any or all newly established companies are personal.
Unlimited Liability in the Case of Transformation
Article 263m
(New, SG No. 58/2003)
(1) Unlimited liability partners in the transforming companies shall remain liable before the creditors for obligations that have arisen prior to the date of the transformation.
(2) Where, in case of a transformation, a person becomes an unlimited liability partner in a receiving company, such person shall not be liable for the obligations of that company that have arisen prior to the date of the transformation.
Prohibition on Discharging from an Obligation
concerning Contributions
Article 263n
(New, SG No. 58/2003)
(1) Partners or shareholders in a transforming or receiving company shall not be discharged from the obligation concerning contributions which have nor been paid in full.
(2) After the date of the transformation, contributions shall be due to the receiving or the newly established company in case of a take-over or merger, and in case of splitting or spinning off they shall be due according to the provisions in the transformation agreement or plan.
Contending the Transformation
Article 263o
(New, SG No. 58/2003)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Any partner or shareholder in a company participating in the transformation, as well as any company participating in the transformation, may, in the event of splitting or spinning off, file a claim with the court in the jurisdiction of which the seat of the transforming company is located, in order to ascertain that none of the following violations have been committed as a result of the transformation, no matter by which of the companies participating in the transformation:
1. lack of a transformation agreement, draft of an agreement, plan or they are null and void;
2. failure to meet the requirements of Article 262f, Article 262g, paragraph 2, subparagraphs 1, 2 and 8 and paragraph 3, Article 262i, Article 262k, Article 262l, paragraphs 2 and 3, Articles 262m - 262u and Article 262w, paragraph 1;
3. the decision to transform contradicts prescriptive provisions of the law or the founding agreement, or the articles of incorporation of the company, as the case may be.
(2) A non-equivalent exchange ratio is not grounds for filing a claim pursuant to paragraph 1.
(3) The claim under paragraph 1 shall be lodged not later than the date of the transformation against all companies participating in the transformation except for the newly established. Any partner or shareholder may step into the proceedings and sustain the claim, even if the claimant should give it up or withdraw it.
(4) (Amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The filing of the claim as per paragraph (1) shall result in suspension of the transformation. The persons as per paragraph (1) shall notify the Recordation Agency of the filing of the claim. Recordation of the transformation shall be denied by force of the effective court decision sustaining the claim.
(5) (Amended, SG No. 59/2007) The claim under paragraph 1 shall be considered according to the rules set out in chapter Thirty-Two "Proceedings on Commercial Disputes" of the Code of Civil Procedure.
(6) The decision to transform may not be attacked by lodging a claim under Article 74.
Nullity of a Newly Established Company
Article 263p
(New, SG No. 58/2003)
(1) (Amended, SG No. 66/2005) After the date of the transformation, one may request the pronunciation of nullity of the company newly established in the transformation by applying Article 70. Such a request may be lodged only by a partner or by a shareholder.
(2) A partner or shareholder may request a pronunciation of nullity also where the general meeting which took the decision to transform has not been duly convened following the procedure established by law or envisaged in the membership agreement or articles of incorporation and he did not attend it.
(3) The claim under paragraph 1 may not be lodged by a partner or shareholder which has take part in proceedings on a claim contesting the transformation and the claim has been rejected.
Claim for Cash Settlement
Article 263q
(New, SG No. 58/2003)
(1) Any partner or shareholder may, within three months following the date of the transformation, lodge a claim for cash settlement with the regional court, if the exchange ratio adopted under the transformation agreement or plan is not equivalent.
(2) The claim under paragraph 1 shall be lodged against the receiving or the newly established company in case of a takeover or merger. In case of splitting or spinning off, the claim shall be lodged against the company or companies in which the partner or shareholder participate after the transformation.
Right to Leave
Article 263r
(New, SG No. 58/2003)
(1) A partner in a limited liability company or a shareholder whose legal status is changing after the transformation and which has voted against the decision to transform may leave the company in which it has received interest stakes or shares. Termination of participation shall be effected under a notarized notice to the company within a period of three months after the date of the transformation.
(2) The partner which has left shall have the right to receive the countervalue of its membership share or shares held prior to the transformation, according to the exchange ratio provided for in the transformation agreement or plan. The partner which has left may lodge a claim for cash settlement within a period of three months after the notice referred to in paragraph 1.
(3) The interest stakes of the partner which ahs left shall be taken over by the remaining partners, offered to a third party or the capital shall be reduced by their amount. The shares of a shareholder which has left shall be taken over by the company and concerning them the rules for the acquisition of own shares shall apply, except for Article 187а, paragraph 4.
Special rules
Article 263s
(New, SG No. 58/2003, amended, SG No. 66/2005)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) Where all companies participating in the transformation are personal, Articles 262i - 262n shall not apply. Upon a request by a managing partner in one of the participating companies, the relevant registrar with the Recordation Agency shall appoint an examiner, which shall conduct an examination for all companies participating in the transformation. In this case, Articles 262l and 262m shall apply, respectively.
(2) Where all transforming and receiving companies are sole proprietorships and the sole proprietor of the capital is one and the same person, the transformation shall take place based on the decision of the sole proprietor. Articles 262f and 262g shall respectively apply in regard to such decision. Articles 262h-262q and Articles 263o-263r shall not apply.
(3) In the process of transformation by spinning-off of a single-person commercial company, no exchange ratio shall be determined and checked. Articles 261b, 262l and 262m shall not apply. This shall also be the case when merging a single-person commercial company into the sole proprietor of its capital.

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