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PART
ONE GENERAL PART
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CHAPTER ONE GENERAL |
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CHAPTER TWO (Repealed, SG No. 38/2006, effective 1.07.2007 - (*) amended, in
relation to becoming effective, SG No. 80/2006) COMMERCIAL REGISTER
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CHAPTER THREE TRADE NAME
AND SEAT
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CHAPTER FOUR ENTERPRISES AND TRANSACTIONS WITH THEM
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CHAPTER FIVE BRANCHES
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CHAPTER SIX AGENCY
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Section I Direct Agency |
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Section II Sales Representative
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Section III Broker
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Section IV Trade Secrets (Title new, SG No. 103/1993)
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CHAPTER SEVEN ACCOUNT
BOOKS
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PART
TWO TYPES OF MERCHANTS
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DIVISION ONE SOLE PROPRIETOR
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CHAPTER EIGHT NATURAL PERSON MERCHANT |
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DIVISION TWO STATE - OWNED AND MUNICIPAL ENTERPRISE
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CHAPTER NINE PUBLIC ENTERPRISE MERCHANT
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DIVISION THREE COMPANIES CHAPTER TEN GENERAL
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CHAPTER ELEVEN GENERAL PARTNERSHIP
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Section I General Provisions
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Section II Partners' Legal Relationships
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Section III Partners' Relationship With Third Parties
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Section IV Dissolution of a Partnership and Termination of
a Partners' Participation
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CHAPTER TWELVE LIMITED
PARTNERSHIP
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Section I General Provisions
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Section II Partners' Legal Relationships
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Section III Partners' Legal Relationships With Third
Parties
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CHAPTER THIRTEEN LIMITED LIABILITY COMPANY
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Section I
General Provisions
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Section II Partners' Rights and Obligations
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Section III Management |
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Section IV Amending
the Articles of Association |
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Section V Dissolution and Liquidation of the
Company |
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CHAPTER FOURTEEN
JOINT-STOCK COMPANY |
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Section I General Provisions |
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Section II
Incorporation |
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Section III Shares |
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Section IV Contributions |
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Section V Increase of Capital |
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Section VI Reduction
of Capital |
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Section VII Debentures
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Section VIII
Conversion of Debentures into Shares |
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Section IX Joint-Stock
Company Organs |
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Subsection I General Meeting of Shareholders |
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Subsection II General Provisions for the Two Systems of Administration
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Subsection III Two Tier System |
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Subsection IV One Tier System |
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Section X Annual
Closing of Accounts and Distribution of Profits |
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Section XI Annual
Audit |
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Section XII
Termination |
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CHAPTER FIFTEEN
PARTNERSHIP LIMITED BY SHARES |
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CHAPTER SIXTEEN
(Amended
and supplemented, SG No. 58/2003 - effective 01.01.2004) TRANSFORMATION OF
COMPANIES |
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Section I General
Provisions |
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Section II Transformation by
Take-Over, Merger, Splitting, Spinning Off |
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Section III Transformation by Change of the
Legal Form |
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Section IV
Transformation by Transfer of Property onto the Sole Owner
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Section V
(New, SG No. 104/2007)
Transformation Involving Companies from Member States of European Union or from
Another Contracting Party to Agreement on the European Economic Area
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CHAPTER
SEVENTEEN
LIQUIDATION |
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CHAPTER EIGHTEEN
(Heading amended, SG No. 104/2007) COMBINATIONS |
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Section I Consortium |
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Section II Holding
Company |
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Section III (New, SG
No. 104/2007) European Economic Interest Grouping |
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CHAPTER NINETEEN
(New, SG No. 104/2007) EUROPEAN COMPANY |
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CHAPTER TWENTY ADMINISTRATIVE PENAL PROVISIONS |
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PART THREE COMMERCIAL TRANSACTIONS (New, SG No. 83/1996)
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CHAPTER TWENTY-ONE GENERAL |
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Section
I General Provisions |
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Section II Conclusion
of commercial transaction |
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Section III
Execution |
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Section IV
Non-performance |
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Section
V Commercial security |
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Section VI
Transfer of rights |
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CHAPTER TWENTY-TWO
COMMERCIAL SALE |
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Section I General Provisions |
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Section II Special rules for some sales
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Section III Sale at public auction with open bidding
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CHAPTER TWENTY-THREE LEASING CONTRACT
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CHAPTER TWENTY-FOUR COMMISSION MERCHANT CONTRACT
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CHAPTER TWENTY-FIVE
FORWARDING CONTRACT |
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CHAPTER TWENTY-SIX
CONTRACT OF CARRIAGE |
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CHAPTER TWENTY-SEVEN
INSURANCE CONTRACT (Repealed, SG No. 103/2005) |
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Section I General Provisions |
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Section II Property insurance |
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Section III "Liability" insurance |
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Section IV "Life" and "accident" insurances
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CHAPTER TWENTY-EIGHT
CONTRACT FOR CURRENT ACCOUNT |
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CHAPTER TWENTY-NINE
BANKING TRANSACTIONS |
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Section I Contract of bank deposit |
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Section II Current account contract |
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Section III Contract for bank credit
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Section IV Letter of credit (Repealed, SG No. 59/2006)
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Section V Documentary letter of credit
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Section VI
Bank guarantee |
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Section VII Bank collection. Bank documentary collection
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Section VIII Bank transfer |
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Section IX Contract for bank safe deposit box (Repealed,
SG No. 59/2006) |
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CHAPTER THIRTY BILL OF
EXCHANGE |
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Section I General Provisions |
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Section II Endorsement |
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Section III Acceptance |
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Section IV
Bill of exchange guarantee |
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Section V
Maturity |
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Section VI Payment |
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Section VII Protest |
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Section VIII Recourse actions |
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Section IX Brokerage |
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Section X Set of copies and transcripts
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Section XI Amendments |
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Section XII
Limitation |
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Section XIII Unmerited gain |
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CHAPTER THIRTY-ONE
PROMISSORY NOTE |
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CHAPTER THIRTY-TWO CHEQUE
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Section I
Issue and form |
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Section II
Endorsement |
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Section III
Payment |
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Section IV
Crossed cheque and cheque directed to account |
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Section V
Recourse due to default on payment |
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Section VI
Set of copies |
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Section VII
Limitation |
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Section VIII
Special provision |
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CHAPTER THIRTY-FOUR DEPOSIT IN PUBLIC WAREHOUSE
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CHAPTER THIRTY-FIVE
LICENCE CONTRACT |
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CHAPTER THIRTY-SIX
CONTRACT FOR COMMODITY CONTROL |
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CHAPTER THIRTY-SEVEN CONTRACT FOR RENT OF SAFE
DEPOSIT BOX (New, SG No. 59/2006) |
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PART
FOUR BANKRUPTCY (New, SG No. 63/1994) |
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CHAPTER THIRTY-EIGHT
GENERAL (Previous Chapter 34, SG No. 83/1996) |
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Section I
General Provisions |
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Section II
Recordation and announcement
(Title amended, SG 38/2006) |
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CHAPTER THIRTY-NINE
INSTITUTING BANKRUPTCY PROCEEDINGS (Previous Chapter 35, SG No. 83/1996)
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Section I
Start of Proceedings |
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Section II
Issue of a Ruling |
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CHAPTER FORTY
EFFECT OF RULING ON INSTITUTION
OF BANKRUPTCY PROCEEDINGS
(Previous Chapter 36, SG No. 83/1996) |
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CHAPTER FORTY-ONE
COMPLEMENTING OF BANKRUPTCY ESTATE. SAFEGUARDING MEASURES (Previous Chapter 37,
SG No. 83/1996) |
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Section I
Complementing of bankruptcy estate |
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Section II
Sealing |
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Section III
Inventory of Property |
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CHAPTER FORTY-TWO
AUTHORITIES AND MANAGEMENT OF THE BANKRUPTCY ESTATE (Previous Chapter 38, SG No.
83/1996) |
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Section I
Trustee |
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Section II
Temporary Trustee in Bankruptcy |
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Section III
First Meeting of Creditors |
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Section IV
Meeting of Creditors |
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Section V
Creditors' Committee |
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CHAPTER FORTY-THREE
CLAIMING RECEIVABLES (Previous Chapter thirty nine, SG No. 83/1996) |
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CHAPTER FORTY-FOUR REORGANISATION OF THE ENTERPRISE
(Previous Chapter 40, SG No. 83/1996) |
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CHAPTER FORTY-FIVE DECLARATION OF BANKRUPTCY
(Previous Chapter 40, SG No. 83/1996) |
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CHAPTER FORTY-SIX CONVERTING THE ASSETS INTO CASH
(Previous Chapter 42, SG No. 83/1996) |
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CHAPTER FORTY-SEVEN
DISTRIBUTION OF THE ASSETS CONVERTED INTO CASH AND COMPLETION OF THE BANKRUPTCY
PROCEEDINGS (Previous Chapter 43, SG No. 83/1996) |
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Section I Distribution of the Assets Converted into Cash |
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Section II
Completion of the Bankruptcy Proceedings |
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CHAPTER FORTY-EIGHT OUT OF COURT SETTLEMENT
(Previous Chapter 44, SG No. 33/1996) |
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CHAPTER FORTY-NINE SPECIFIC RULES FOR COMPANIES
(Previous Chapter 45, SG No. 83/1996) |
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CHAPTER FIFTY RESUMPTION OF BANKRUPTCY PROCEEDINGS (Previous Chapter 46,
SG No. 83/1996) |
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CHAPTER FIFTY-ONE RESTORATION OF DEBTOR RIGHTS
(Previous Chapter 47, SG No. 83/1996) (Title amended, SG 38/2006) |
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SUPPLEMENTARY PROVISIONS (New, SG No. 63/1994)
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TRANSITIONAL AND CONCLUDING PROVISIONS |
Promulgated State Gazette No. 48/18.06.1991,
effective 1.07.1991, amended SG No. 25/27.03.1992, amended and supplemented, SG
Nos. 61/16.07.1993, 103/7.12.1993, 63/5.08.1994, amended, SG No. 63/14.07.1995,
amended and supplemented SG No. 42/15.05.1996, effective 15.05.1996, amended SG
No. 59/12.07.1996, effective 1.07.1996, amended and supplemented, SG No.
83/1.10.1996, effective 1.11.1996, amended SG No. 86/11.10.1996, effective
1.01.1997, SG No. 104/6.12.1996, effective 6.01.1997, SG No. 58/22.07.1997,
effective 22.07.1997, amended and supplemented, SG Nos. 100/31.10.1997,
124/23.12.1997, effective 1.04.1998, SG No. 21/20.02.1998, supplemented, SG No.
39/7.04.1998, SG No. 52/8.05.1998, amended and supplemented, SG No.
70/19.06.1998, amended, SG No. 33/9.04.1999, supplemented, SG No. 42/5.05.1999,
amended, SG No. 64/16.07.1999, amended and supplemented, SG No. 81/14.09.1999,
effective 15.12.1999, amended, SG No. 90/15.10.1999, supplemented, SG No.
103/30.11.1999, effective 30.11.1999, amended and supplemented, SG No.
114/30.12.1999, effective 31.01.2000, SG No. 84/13.10.2000, amended, SG No.
28/19.03.2002, amended and supplemented, SG No. 61/21.06.2002, supplemented, SG
No. 96/11.10.2002, amended, SG No. 19/28.02.2003, amended and supplemented, SG
No. 31/4.04.2003, effective 4.04.2003, SG No. 58/27.06.2003, SG No.
31/8.04.2005, effective 8.10.2005, amended SG No. 39/10.05.2005, No.
42/17.05.2005, No. 43/20.05.2005, effective 1.09.2005, amended and supplemented,
SG No. 66/12.08.2005, amended SG No. 103/23.12.2005, effective 1.01.2006,
amended and supplemented, SG No. 105/29.12.2005, effective 1.01.2006, SG No.
38/9.05.2006, SG No. 59/21.07.2006, effective as from the date of entry into
force of the Treaty of Accession of the Republic of Bulgaria to the European
Union - 1.01.2007, amended SG No. 80/3.10.2006, effective 3.10.2006, SG No.
105/22.12.2006, effective 1.01.2007, amended and supplemented, SG No.
59/20.07.2007, effective 1.03.2008, amended, SG No. 92/13.11.2007, amended and
supplemented, SG No. 104/11.12.2007, amended, SG No. 50/30.05.2008, effective
30.05.2008, SG No. 67/29.07.2008, supplemented, SG No. 70/8.08.2008, amended, SG
No. 100/21.11.2008
__________
*Note: An update of the English text of this Act is being prepared following the
amendments in SG No. 108/19.12.2008
PART ONE
GENERAL PART
CHAPTER ONE
GENERAL
Article 1 Merchant
(1) (Amended, SG No. 83/1996) For the purposes of this Act a merchant shall mean
any natural or legal person engaged by occupation in any of the following
transactions:
1. purchasing goods or other chattels for the purpose of reselling them in their
original, processed or finished form;
2. (amended, SG No. 83/1996) sale of one's own manufactured goods;
3. (amended, SG No. 83/1996) purchasing securities for the purpose of reselling
them;
4. (amended, SG No. 83/1996) commercial agency and brokerage;
5. (amended, SG No. 83/1996) commission, forwarding and transportation
transactions;
6. (amended, SG No. 83/1996) insurance transactions;
7. (amended, SG No. 83/1996) banking and foreign-exchange transactions;
8. (amended, SG No. 83/1996) bills of exchange, promissory notes and cheques;
9. (amended, SG No. 83/1996) warehousing transactions;
10. (amended, SG No. 83/1996) licence transactions;
11. (amended, SG No. 83/1996) supervision of goods;
12. (amended, SG No. 83/1996) transactions in intellectual property;
13. (amended, SG No. 83/1996) hotel operation, tourist, advertising,
information, entertainment, impresario and other services;
14. (amended, SG No. 83/1996) purchase, construction or furnishing of real
property for the purpose of sale;
15. (amended, SG No. 83/1996) leasing.
(2) Merchants are:
1. companies;
2. the cooperatives, except housing cooperatives.
(3) Any person which has established a business, which in accordance with its
purposes and volume requires that its activities be conducted on a commercial
basis even if not listed under para 1, shall also be deemed a merchant.
Article 2 Persons Who Are Not Merchants
The following shall not be deemed merchants:
1. natural persons engaged in farming;
2. artisans, persons providing services through their own labor or members of
the professions, except where their activity may be defined as a business within
the meaning of Article 1, para 3;
3. persons providing hotel services by letting rooms in their own home.
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CHAPTER TWO
(Repealed, SG No. 38/2006, effective 1.07.2007 -
(*) amended, in relation to becoming effective, SG No. 80/2006)
COMMERCIAL REGISTER
Article 3 Keeping a Commercial Register
(Supplemented, SG No. 66/2005, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006)
Article 4 Obligation to Register
(Amended, SG No. 66/2005, repealed, No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006)
Article 4a Registration Effect
(New, SG No. 84/2000, repealed, No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
Article 5 Public Nature of the Commercial Register
(Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006)
Article 6 Publishing of Registration
(Amended, SG No. 103/1993, supplemented, SG No. 66/2005, repealed, No. 38/2006,
effective 1.07.2007 - amended, in relation to becoming effective, SG No.
80/2006)
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CHAPTER THREE
TRADE NAME AND SEAT
Article 7 Definition
(1) A trade name shall be the name under which a merchant shall carry on its
business and under which it shall sign.
(2) (Amended, SG No. 103/1993) In addition to the necessary content established
by law, a trade name may also denote the purposes of a business, the names of
the partners, and a freely chosen extension. A trade name must correspond to the
truth, must not deceive, and must not be offensive to public order and morals.
(3) (New, SG No. 103/1993) The merchant shall mandatorily inscribe its trade
name in Bulgarian. It may additionally inscribe it in a foreign language.
Article 8 Trade Name of a Branch
The trade name of a branch shall incorporate the trade name of the merchant and
the extension "branch".
Article 9 Trade Name During Liquidation (Supplemented, SG No. 63/1994)
The trade name of a merchant which has been declared in liquidation shall carry
the extension "in liquidation", and upon declaration of bankruptcy - "in
bankruptcy".
Article 10 Change of Trade Name
(1) A trade name may be changed upon an application by the merchant which has
registered it.
(2) Should a trade name contain the name of a retiring partner, it may be
preserved only with that partner's consent.
Article 11 Exclusive Right
(1) A trade name may be used only by the merchant which has registered it.
(2) In case of use of another's trade name the interested parties shall be free
to seek an injunction, as well as damages for such use.
Article 12 Seat and Registered Office
(1) A merchant's seat shall be the community where its registered office is
located.
(2) A merchant's address shall be the address of its registered office.
Article 13 Obligation to Provide Data
(1) (Previous Article 13, SG No. 84/2000, supplemented, No. 66/2005, amended and
supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) A merchant shall provide the following data
on all its commercial correspondence and its web site if available: trade name;
seat and registered office; standard identification code and bank account. A
merchant may also provide a forwarding address. Where a commercial company shows
the amount of its capital, it must also indicate what portion of it has been
paid in.
(2) (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 company data shall be
shown on the business correspondence of the branch.
Article 14 Change of Seat
(1) (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) Any relocation of
a merchant's registered office to another community shall be declared for entry
into the commercial register.
(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) .
(4) (Repealed, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) .
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CHAPTER FOUR
ENTERPRISES AND TRANSACTIONS WITH THEM
Article 15 Transactions With an Enterprise
(1) An enterprise as a set of rights, obligations and factual relations shall be
transferable by a transaction in writing with the signatures attested by a
notary public. The transferor shall advise all creditors and debtors of the
effected transfer.
(2) (New, SG No. 58/2003) Where the entire enterprise of a company is
transferred, such transfer shall require a decision taken in accordance with
Article 262p.
(3) (Renumbered from Paragraph 2, supplemented, SG No 58/2003) Absent another
agreement with the creditors, upon the transfer of an enterprise the transferor
shall be liable jointly and severally with the transferee. Creditors of
recoverable liabilities shall first address the transferor up to the amount of
rights obtained.
Article 16 Registration
(1) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006) The transfer of an enterprise
shall be registered in the commercial register simultaneously in the files of
both the transferor and the transferee.
(2) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006) .
(3) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006) .
(4) (Amended SG 104/1996, renumbered from Paragraph 2, SG No. 58/2003) Should
the contract transfer real property or another interest therein, the contract
shall be registered with the recordation office as well.
Article 16a Provision of security for creditors (New, SG No. 42/1999,
amended, SG No. 58/2003)
(1) (Amended and supplemented, No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006) The transferee shall manage
separately the enterprise transferred onto it for a period of 6 months as from
the registry entry of the transfer.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) Within the lime limit referred to in
paragraph (1), any creditor of the transferor or of the transferee holding a
claim that has not been secured and has arisen prior to the date of registration
of the transfer may request execution or securing, in compliance with their
rights. If the request is not satisfied the creditor shall enjoy the right of
privileged satisfaction from the rights that used to be held by its debtor.
(3) Members of the governing body of the transferee shall be liable jointly and
severally before creditors for the separate management.
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CHAPTER FIVE
BRANCHES
Article 17 Branch
(1) A merchant may open a branch outside the community where its seat is
located.
(2) (Amended, SG No. 58/2003, No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006) A branch shall be registered in
the commercial register on the basis of a written application indicating:
1. the seat and purposes of the branch;
2. data concerning the person who manages the branch, and concerning the scope
of his representation powers.
(3) (Amended, SG No. 58/2003) The application referred to in paragraph (2) which
shall enclose the notarized consent, with a signature specimen, of the person
who manages the branch.
(4) (Amended, SG No. 58/2003, supplemented, SG No. 66/2005, repealed, No.
38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG
No. 80/2006) .
(5) (Amended, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006) .
(6) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006) .
(7) (New, SG No. 58/2003, repealed, SG No. 66/2005) .
Article 17a Branch of a foreign person (New, SG No. 66/2005)
(1) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) A branch of a foreign person registered with
the right to engage in commercial activity in accordance with its national law
shall be registered in the commercial register.
(2) In addition to the data under Article 17(2), the application for
registration shall also contain data on:
1. The legal form and company or the name of the foreign person, as well as the
branch name, if different from the one of the foreign person;
2. the register and number, under which the foreign person was recorded, if
provided for by applicable law;
3. the law of the state, applicable to the foreign person, if different from the
law of an EU Member State;
4. persons, which represent the foreign person according to the register, where
it was recorded, where such a register exists, the manner of representation, as
well as the liquidators and receivers and their powers.
(3) The following data shall also be recorded in the register:
1. those under paragraph 2, as well as any change thereto, including of winding
down of the branch;
2. of dissolution of the foreign person, initiation of liquidation, continuation
of activity, termination and conclusion of liquidation;
3. regarding all acts of the bankruptcy court, which are recorded in the
register, whereon the foreign person was entered, as well as the resolutions
under Article 759(1) and Article 760(3), if any;
4. regarding striking out of the foreign person.
(4) A transcript of the following shall be submitted to the register:
1. the founding act, articles or statute of the foreign person, to contain all
amendments and supplements, including after the registration of the branch;
2. each annual financial statement of the foreign person, after it has been
registered or delivered in accordance with the legislation of the country, where
it was registered.
Article 18 Relocation of a Branch
The rules pertaining to a merchant shall apply mutatis mutandis to the seat and
registered office of a branch and its relocation.
Article 19 Account Books of a Branch
A branch shall keep its account books as an independent merchant, without
preparing a separate balance sheet. The branch of a legal person which is not a
merchant within the meaning of this Act and the branch of a foreign person shall
further prepare a balance sheet.
Article 20 Jurisdiction
Actions based on disputes arising from a direct relationship with a branch may
be brought against the merchant at the seat of the branch as well.
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CHAPTER SIX
AGENCY
Section I
Direct Agency
Article 21 Procurator (Manager)
(1) (Amended, SG No. 70/1998) A procurator shall be a natural person
commissioned and authorized by a merchant to manage its enterprise for
compensation. Such authority may be given to more than one person for either a
separate or joint exercising of the procuration. The signatures on the
procurator's mandate (procuration) shall be notarized and it shall be submitted
by the merchant for registration in the commercial register together with a
specimen signature of the procurator.
(2) A procurator shall sign by adding his own name to the merchant's trade name
and an extension indicating the procuration.
Article 22 Procurator's Powers
(1) A procurator shall be entitled to perform or effect any acts or transactions
related to the carrying on of the business activities, to represent the
merchant, and to authorize third parties to perform specific acts. He may not
authorize third parties with those of his powers which are derived by operation
of law.
(2) A procurator may not alienate or encumber any real property of the merchant
except when expressly authorized to do so. The authorization may be restricted
to the business of a single branch. No other restrictions shall be binding upon
third parties.
Article 23 Relationship Between Merchant and Procurator
The relationship between a merchant and a procurator shall be governed by an
agreement.
Article 24 Binding Effect of Authorization upon Third Parties
An authorization shall be binding upon third parties only after being registered
in the commercial register.
Article 25 Termination of Authorization
(1) An authorization shall be terminated upon withdrawal by the merchant, and
the registration of such withdrawal in the commercial register.
(2) An authorization shall not be terminated by virtue of a merchant's death or
placing under judicial disability.
Article 26 Agent
(1) An agent shall be a person authorized by a merchant to perform, for
compensation, the acts set forth in the mandate. Absent any other instructions,
an agent shall be deemed authorized to perform all acts related to the
merchant's usual business. The authorization shall be made in writing and the
signature shall be notarized.
(2) An agent shall need express authorization to alienate or encumber real
property, to accept bills of exchange, to obtain a loan, or to engage in
litigation. Any other restrictions on its mandate shall be binding upon a third
party only if that party new or ought to have known of such restrictions.
(3) An agent may not transfer its powers to a third party without the merchant's
consent.
(4) An agent shall sign by adding its own name to the trade name and an
extension indicating the agency.
Article 27 Relationship Between Merchant and Agent
The relationship between a merchant and an agent shall be governed by an
agreement.
Article 28 Termination of the Mandate
The authorization of an agent shall be terminated in accordance with the
provisions of civil law.
Article 29 Restrictions and Liability
(1) A procurator or agent may not, without the merchant's consent, effect
commercial transactions either on their own behalf or on the behalf of a third
party within the framework of their authorization. Consent shall be deemed given
if at the time of authorization the merchant knew of the carrying on of such
activities and their termination was not agreed upon expressly.
(2) In case of a breach of the obligations set forth in the preceding para the
merchant shall be entitled to seek damages or to state that the transactions
effected by the authorized persons have been effected on its behalf. The
statement shall be made in writing not later than one month of its becoming
aware of the transaction, but not later than one year of the effecting of the
transaction, and shall be addressed to the procurator or agent and to the third
party.
(3) Actions pursuant to para 2 shall expire by limitation after five years from
the date the transaction was effected.
Article 30 Shop Assistant
(1) The relationship between a merchant and its assistant shall be governed by a
contract.
(2) A shop assistant may not effect transactions on the merchant's behalf. When
working in a generally accessible sales area, a shop assistant shall be deemed
authorized to effect the transactions which are usually effected in such an
area.
Article 31 Restrictions
A shop assistant may not engage in any commercial activity independently or on
the behalf of third parties in competition with his employer, except with the
latter's express consent.
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Section II
Sales Representative
Article 32 Definition
(1) A sales representative shall be a person engaged independently and by
occupation in assisting the business of another merchant. A sales representative
may be authorized to effect transactions in the name of the merchant, or in its
own name but on the behalf of the merchant.
(2) (Supplemented, SG No. 38/2006) The contract between the merchant and the
sales representative shall be executed in writing. The merchant may not refer
against a sales representative to agreements in deviation of the provisions of
Articles 33, 34, Article 36, Paragraph (4) and (5) and Article 40 that stand to
the detriment of said representative.
Article 33 Sales Representative's Obligations
(1) (Amended, SG No. 83/1996, previous Article 33, SG No. 38/2006) A sales
representative shall cooperate or effect transactions with due care, taking into
consideration the merchant's interests. It shall forthwith notify the merchant
of any transaction effected by it.
(2) (New, SG No. 38/2006) The sales representative shall be obligated to follow
the instructions of the merchant, providing said merchant with the entire
information at his/her disposal in relation to the activity thereof.
Article 34 Merchant's Obligations
(1) (Amended and supplemented, SG No. 38/2006) The merchant shall be obligated
to provide the trade representative the necessary information and documents for
conclusion and execution of the commissioned deals.
(2) (Supplemented, SG No. 38/2006) The merchant shall be obligated to promptly
notify the trade representative whether said merchant accepts the deal concluded
without authority of representation, as well as whether he has concluded a deal
prepared thereby.
(3) (New, SG No. 38/2006) The merchant shall be obligated to provide the trade
representative with the information necessary for the implementation of the
activity thereof, including of possible considerable reduction of volume of
concluded deals as compared to the expected.
Article 35 Commission Under Del Credere Contracts
A sales representative which undertakes to be personally liable for the
performance of obligations under effected transactions shall be entitled to an
additional commission which shall be agreed upon in writing. The parties may not
agree in advance that no such commission shall be owed.
Article 36 Right to Commission
(1) (Amended and supplemented, SG No. 38/2006) A sales representative shall be
entitled to a commission for all transactions effected by it or through its
assistance during the term of its contract with the merchant. A commission shall
also be paid for transactions prepared but not concluded, except in the cases
where this is due to a reason for which the merchant may not be faulted.
(2) Where a sales representative is entrusted with a specified territory or
circle of clients, it shall also be entitled to a commission for all
transactions concluded without its assistance, but with persons from the same
territory or with the same clientele.
(3) A sales representative shall be entitled to a commission for any of the
merchant's claims which it has collected.
(4) (New, SG No. 38/2006) The merchant shall be obligated to provide the sales
representative the information necessary for calculation of the commission due
no later than the time limit referred to in Article 38.
(5) (Renumbered from Paragraph (4), supplemented, SG No. 38/2006) Either party
shall be entitled to request from the other abstracts from the account books
concerning the transactions concluded on the basis of the agency agreement,
including those that are necessary to check the commission determined.
Article 37 Commission Rate (Supplemented, SG No. 38/2006)
Where the commission has not been agreed upon, it shall be deemed to amount to
the customary rate paid for the specific activities. If the customary rate
cannot be established, the commission shall be determined by the court according
to merit.
Article 38 Commission Payment Term (Amended and supplemented, SG No.
38/2006)
A sales representative's commission shall be paid on a monthly basis. The
contract may specify another term for the payment of the commission, but not
longer than the end of the month following the quarter during which the relevant
transaction was concluded or has to be concluded.
Article 39 Reimbursement for Customary Expenses
A sales representative shall be entitled to reimbursement for the customary
expenses related to its activities, unless the agreement provides otherwise.
Article 40 Compensation and Commission upon Dissolution (Amended, SG No.
103/1993, SG No. 38/2006)
(1) A sales representative, respectively the heirs thereof in the case of
his/her death, shall be entitled to a compensation upon termination of agreement
when the merchant continues to enjoy benefits from the clientele established by
the sales representative or the latter has considerably increased the volume of
transactions concluded therewith. The right to such compensation shall be judged
in view of all circumstances, including the existence or absence of restrictive
commercial clauses.
(2) Such compensation shall be equal to the annual commission of the sales
representative, calculated on the basis the sales representative's average
annual commission for the entire duration of its agreement, but for not more
than the last five preceding years.
(3) The compensation referred to in Paragraph (2) may not be claimed when:
1. more than one year has expired following the termination of the contract
without the sales representative having informed the merchant in writing of
claiming the compensation due.
2. the contract is rescinded at the fault of the trade representative or has
been terminated unilaterally by the trade representative pursuant to Article 47
(1) or (2), except where this has occurred as a result of the permanent
incapacitation or age thereof.
3. the trade representative has transferred the legal relationship to another
person, including with the agreement of merchant.
(4) Upon termination of contract the sales representative may claim compensation
for already concluded or prepared for conclusion deals.
(5) The sales representative shall not be entitled to a commission under Article
36 where pursuant to Paragraph (4) it is due to a previous trade representative,
except in the cases where according to circumstances the commission should be
divided between the two.
Article 41 Restrictions Following Termination of Contract
(1) Any restrictions on the activities of a sales representative subsequent to
the termination of the agreement shall be agreed upon in writing.
(2) Restrictions must encompass the same territory and type of goods or services
as the agency agreement. They may not be for more than two years following the
termination of the contract. The merchant shall owe a respective compensation
for the period of restriction.
(3) Should a sales representative declare the agreement avoided through a fault
of the merchant, the sales representative shall be free to discharge itself from
the said restrictions not later than one month from the date of the avoidance.
Article 42 Effect of Restriction
Even when not authorized to conclude contracts a sales representative may accept
acts performed by third parties to protect their rights against imperfect
performance by the merchant. A sales representative may act to secure evidence
in name of the merchant. Any restriction on these rights shall be binding upon
third parties only if they knew or ought to have known of the said restriction.
Article 43 Ratification of Contract
Should a sales representative conclude contracts without authorization, and the
third party did not know of that fact, the contract shall be deemed ratified by
the merchant if the merchant fails to reject it upon being notified of it by the
sales representative or the third party and inform them correspondingly.
Article 44 Prohibition on Representation of Competitors
A sales representative may represent several merchants as long as they are not
in competition among themselves. It may reach agreement with a merchant to be
its exclusive sales representative.
Article 45 Scope of Agency
The subject and territory of a sales representative shall be determined by the
agency agreement.
Article 46 Relationship Between Merchant and Sales Representative
(1) The internal relationship between the sales representative and the merchant
shall be governed by the agreement between them. Absent any other provision, a
sales representative shall arrange for its own premises. If the compensation is
not indicated in the agreement, the customary compensation for the type of
representation shall be due.
(2) Representation under the preceding paragraph may not be delegated to another
party in the same territory.
(3) A sales representative shall indicate in the documents issued by it and on
its commercial correspondence the information required under Article 13.
Article 47 Termination of Representation
(1) (New, SG No. 103/1993, amended, SG No. 38/2006) Where the sales
representation agreement has been concluded for an indefinite term, during the
first year any of the parties thereto may terminate it with a month's prior
notice, within the second year - with a two month's prior notice, and within the
third year - with a three months' prior notice, the parties thereto being unable
to negotiate shorter terms. Where a longer period of prior notice has been
agreed, that period should be identical for both parties. If not otherwise
agreed, the termination of the agreement shall be effective from the end of the
calendar month in which the term of prior notice has expired.
(2) (New, SG No. 103/1993) An agreement which has been concluded for a definite
period may be terminated before its expiration if the party wishing to terminate
it compensates the other party for the damages caused.
(3) (New, SG No. 103/1993) The rights of the sales representative under Article
40 may not be prejudiced by the termination pursuant to paras 1 and 2.
(4) (New, SG No. 38/2006) In case following the expiry of contract for trade
representation both parties continue to fulfill their obligations thereunder,
said contract shall be considered extended for an indefinite term. In this case,
when determining the term of prior notice referred to under Paragraph (1) the
duration of the contract prior to the expiry of its term shall also be taken
into consideration.
(5) (Renumbered from Paragraph (1), SG No. 103/1993; renumbered from Paragraph
(4), amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) A sales representative that has ceased
activity shall apply, within the time limit set forth in Article 4, for
expungement of entry into the commercial register.
(6) (Repealed, renumbered from Paragraph (5), amended, SG No. 38/2006, effective
1.07.2007 - amended in relation to becoming effective, SG No. 80/2006) Should a
representation be terminated by reasons of death or placing under disability of
the sales representative, the heirs or, respectively, the guardian, and in case
of bankruptcy the respective court, shall be obligated to request expungement
from commercial register.
Article 48 Applicability
The provisions of Articles 32 to 47 shall not apply to persons engaged as
representatives or brokers in stock exchange transactions, or as representatives
of persons engaged in auction operations.
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Section III
Broker
Article 49 Definition
(1) A broker shall be a merchant which by occupation acts as an intermediary so
that transactions may be entered into.
(2) (Amended, SG No. 86/1996) As far as brokerage for contracts for the carriage
of goods by sea and for stock exchange transactions are concerned, the
provisions for the said activities shall apply even when the brokerage is
performed by a mercantile broker.
Article 50 Broker's Journal
(1) A broker shall keep a journal in which it shall record on a daily basis all
executed contracts. At the end of each day the broker shall date and undersign
all entries for that day.
(2) Contracts shall be recorded consecutively in the order of their execution;
an entry shall include the names of the contracting parties, the time of
execution of the contract and the essential arrangements.
(3) A broker must, upon request, provide the parties with an abstract from its
journal containing the full entry concerning their contract.
Article 51 Brokerage
A broker shall be entitled to a commission from one or both parties in
accordance with the arrangement reached. Absent such an arrangement, the
customary brokerage for the type of transaction in the specific circumstances
shall be owed by both parties.
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Section IV
Trade Secrets
(Title new, SG No. 103/1993)
Article 52 Obligation to Protect Trade Secrets (Title amended, SG
103/1993)
In carrying on their activities a procurator, an agent, a shop assistant, a
sales representative and a broker must protect the trade secrets of the persons
which have commissioned them to perform certain acts, as well as their good name
as merchants.
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CHAPTER SEVEN
ACCOUNT BOOKS
Article 53 Obligation to Keep Accounts
(1) A merchant shall keep accounts in which it shall record the movements of its
enterprise's property. Such movements shall be recorded in chronological order.
(2) A merchant shall, through inventory performed within the time periods
prescribed by the Accountancy Act , establish the availability and value of the
items of the assets and liabilities of its enterprise's property.
(3) (Supplemented, SG No. 66/2005, amended, SG No. 67/2008) A merchant shall sum
up the results of its commercial activities on the basis of the entries in its
books of account and of the inventory, and prepare an annual financial statement
and, where necessary, the relevant accounting notes. The annual financial
statement must be audited by a registered auditor in the cases provided for by a
law.
Article 54 Continuity Of Opening and Closing Balance Sheet
The opening balance sheet for each year shall correspond to the closing balance
sheet for the preceding year. A balance sheet shall also be prepared when a
merchant winds up its activities.
Article 55 Admissibility as Evidence
(1) Regularly kept account books and entries therein shall be admissible as
evidence between merchants for establishing commercial transactions.
(2) Account books kept in violation of the provisions of this Act or the
Accountancy Act shall be inadmissible as evidence in favor of the party whose
duty it is to keep them.
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PART TWO
TYPES OF MERCHANTS
DIVISION ONE
SOLE PROPRIETOR
CHAPTER EIGHT
NATURAL PERSON MERCHANT
Article 56 Definition
Any natural person possessing capacity whose domicile is in the country may
register as a sole proprietor.
Article 57 Restrictions
Ineligible to be a sole proprietor shall be a person:
1. who is bankrupt and his rights have not been restored;
2. (amended, SG No. 63/1994) who has intentionally gone bankrupt and has left
unsatisfied creditors.
3. (new, SG No 63/1994) who has been convicted for bankruptcy.
Article 58 Registration
(1) A sole proprietor shall be registered on the basis of an application which
shall state:
1. the name, domicile, address and Unified Civil Code (EGN);
2. the trade name under which the activities shall be carried on;
3. the seat and the address of the registered office;
4. the purposes of the business.
(2) A specimen of the merchant's signature and an affidavit stating that the
person has not been deprived of the right to carry on commercial activities
shall be attached to the application.
(3) (New, SG No. 124/1997) Entered in the register shall be all data specified
under para 1.
(4) (Renumbered from Paragraph 3, SG No. 124/1997) A person may register only
one trade name as a sole proprietor.
Article 59 Trade Name of Sole Proprietor
A sole proprietor's trade name shall incorporate without abbreviation the
person's given name and either the surname or patronymic by which he is
generally known.
Article 60 Transfer of Trade Name
(1) A sole proprietor's trade name may be transferred to a third party only
together with his enterprise. The consent to transfer a trade name shall be
given in accordance with Article 15, para 1.
(2) A sole proprietor's heirs, on acquiring the enterprise, shall be free to
retain its trade name.
(3) In cases under the preceding paragraphs the new owner's name shall be added
to the trade name.
(4) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) The transfer shall be registered in the
commercial register.
Article 60a Deletion from the Register (New, SG No. 84/2000)
The registration of a sole proprietor shall be deleted from the commercial
register:
1. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) upon termination of the sole proprietor's
activity or establishing his/her residence abroad - upon a written request from
said sole proprietor;
2. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) in case of the sole proprietor's death -
upon an application from the heirs;
3. (amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) in case of legal disability of the sole
proprietor - upon an application from the guardian or the trustee.
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DIVISION TWO
STATE - OWNED AND MUNICIPAL ENTERPRISE
CHAPTER NINE
PUBLIC ENTERPRISE MERCHANT
Article 61 Status
A state-owned and municipal enterprise shall be either a single person limited
liability company or a single person joint-stock company. State-owned and
municipal enterprises may also form other companies or groups of companies.
Article 62 Formation
(1) State-owned enterprises shall be formed as or transformed into single person
limited liability companies or single person joint-stock companies pursuant to a
procedure to be established by a law.
(2) Municipal enterprises shall be formed as or transformed into single person
limited liability companies or single person joint-stock companies through a
resolution of the municipal council.
(3) State-owned enterprises which are not companies may be formed with a law.
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DIVISION THREE
COMPANIES CHAPTER TEN GENERAL
Article 63 Definition
(1) A company is an association of two or more persons for effecting commercial
transactions with joint means.
(2) In cases provided by a law a company may be incorporated by one person.
(3) Companies shall be legal persons.
Article 64 Types of Companies
(1) The types of companies are:
1. general partnership;
2. limited partnership;
3. limited liability company;
4. joint-stock company;
5. partnership limited by shares.
(2) Only the companies set forth in this Act may be established.
(3) (New, SG No. 58/2003) Companies referred to in paragraph (1), subparagraphs
(1) and (2) shall be personal, and those in subparagraphs (3) through (5) shall
be equity companies.
(4) (Renumbered from Paragraph 3, amended, SG No. 58/2003) Under a law it may be
envisaged that a certain activity can be performed only by a certain type of
companies.
Article 65 Partners in a Company
(1) A company's founders shall be Bulgarian or foreign natural or legal persons
possessing capacity.
(2) A person may participate in one or more companies to the extent such
participation is not prohibited by law.
(3) (New, SG No. 84/2000) Whenever a company participates in another company,
its rights of associate or single owner shall be exercised by the person
entitled to represent the company or by an expressly authorized person.
Article 66 Preliminary Agreement to Form a Company
Persons wishing to form a company may reach agreement on the acts which must be
performed so that the incorporation may be prepared. For a breach of obligations
based on that agreement the parties shall be liable only for the actual damages
caused.
Article 67 Formation of a Company
A company shall be deemed formed on the date of its registration in the
commercial register. The application for registration shall be filed by the
appointed managing organ.
Article 68 Interpretation of the Articles of Association
The will of the parties and the objective of the interpreted provision shall be
taken into account when interpreting the Articles of Association.
Article 69 Liability for Acts Performed by the Company Prior to Registration
(1) Any acts by the founders performed in the name of the as yet unincorporated
company prior to the date of its registration shall create rights and
obligations for the persons who have carried out the said acts. When
transactions are effected it shall mandatorily be noted that incorporation is
pending. The persons who have effected the transactions shall be liable jointly
and severally for undertaken obligations.
(2) When the transaction has been effected by the founders or a person
authorized by them, the rights and obligations shall be transferred ex lege to
the incorporated company.
Article 70 Voidability of Incorporated Company
(1) (Amended, SG No. 84/2000) The incorporation of a company shall be voidable
only when one of the following violations has been made:
1. there is no constitutive agreement or the constitutive agreement has not been
concluded in the form prescribed by the law;
2. the provisions of article 159 and article 163 have not been complied with, in
the case of a joint-stock company or a partnership limited by shares;
3. (supplemented, SG No. 66/2005, repealed, SG No. 38/2006, effective 1.07.2007
- amended, in relation to becoming effective, SG No. 80/2006) .
4. the purpose of the company contradicts law or good morals;
5. the constitutive agreement or the articles of incorporation does not contain
the name, the purpose of the company or the size of the contributions, as well
as the capital, when required by law;
6. the part of the capital prescribed by law has not been paid in;
7. a smaller number of persons possessing capacity than provided by the law have
participated in the incorporation of the company.
(2) (Amended and supplemented, SG No. 84/2000, supplemented, SG No. 58/2003,
amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to becoming
effective, SG No. 80/2006) Any interested party, as well as the public
prosecutor, may request from the district court of the company's registered
office that the company be declared void within one year after the establishment
of the company and where the incorporation had been subject to promulgation,
after such publication. In the cases under Items 4, 5 and 6 of Paragraph (1),
the court shall declare a company void only if the violation has not been
already eliminated or cannot be eliminated in a suitable period given by the
court in a resolution.
(3) (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 court's
judgement to declare the company void shall be effective from the date of entry
into force. As of that moment the company shall be deemed terminated and the
court shall send the judgement for entry into the commercial register, after
which liquidation shall be carried out by a liquidator appointed by the official
on registration with the Registry Agency.
(4) (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 - amended,
in relation to becoming effective, SG No. 80/2006) .
(5) (Renumbered from Paragraph 4, SG No 58/2003) Where acts in the name of the
company declared void have been carried out, the founders shall be liable
jointly and severally and their liability shall be unlimited.
(6) (New, SG No. 84/2000, renumbered from Paragraph 5, SG No 58/2003, amended,
SG No. 59/2007) Article 605 of the Code of Civil Procedure does not apply to the
incorporation of a company.
Article 71Protection of Partnership
Any partner in a company may bring an action to the district court of the
company's seat to protect its right to be a partner and its individual rights as
a partner, when these have been violated by the company's organs.
Article 72 Non-Monetary Contributions
(1) Should a partner or, respectively, a shareholder, make a non-monetary
contribution, the articles or, respectively the Articles of Association, shall
state the name of the contributor, a full description of the non-monetary
contribution, its monetary value, and the grounds for the contributor's rights.
(2) (Supplemented, SG No. 103/1993, amended and supplemented, SG No. 84/2000,
supplemented, No. 66/2005, amended, SG No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006) The contribution in
a limited liability company, a joint-stock company or a partnership limited by
shares shall be valued by three independent experts appointed by the official on
registration with the Registry Agency. The conclusion of the experts shall
contain a full description of the non-monetary contribution, the method of
valuation, the resulting valuation and its consistence with the amount of the
share of the capital or the number, the nominal and issuing value of the shares
subscribed by the contributor. The conclusion shall be presented at registration
in the Commercial Register with the application for entry.
(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 valuation stated
in the articles or, respectively, the Articles of Association, shall not be
higher than the valuation assigned by the experts.
(4)(Renumbered from Paragraph 3, SG No 84/2000) Should the contributor not agree
with the valuation, it may participate in the company with a monetary
contribution or withdraw from participation in the company.
(5) (Renumbered from Paragraph 4, SG No 84/2000) The contribution may not have
as a subject future labor or services.
Article 73 Paying Up of Non-Monetary Contributions
(1) The contribution of a right for the creation or transfer of which a notarial
form is required shall be effected with the articles. For contributions to a
joint-stock company the consent in writing of the contributor and a description
of the contribution with a notarized signature shall be attached to the Articles
of Association.
(2) The contribution of any other rights shall be made pursuant to the form the
law provides for their creation or transfer.
(3) ( Supplemented, SG No. 84/2000) The contribution of a claim shall be made
with the articles or, respectively, the Articles of Association, and the
contributor shall attach evidence of having notified the debtor of the transfer
of the claim. The requirement for notification does not apply when the claim is
against the company itself.
(4) Title to a contribution shall be acquired from the moment of the company's
formation.
(5) (Amended SG 104/1996) Where a contribution has as a subject a real right
over real property, the respective organ of the company shall, after such right
has arisen, present an abstract of the articles, certified by a recordation
judge, for recording in the recordation office and, whenever necessary,
separately the contributor's consent as well. Such organ shall present an
abstract of the Articles of Association certified by a recordation judge and the
contributor's consent. In making the recording the recordation judge shall
ascertain the contributor's rights.
Article 73a Remission and Set-Off Ban (New, SG No. 84/2000)
The obligations of the partners in a limited liability company and of the
stock-holders for contributions to the capital shall not be remitted except when
reduced, nor offset.
Article 73b Concealed Non-Monetary Contribution (New, SG No. 84/2000)
(1) When a joint-stock company, within a 2-year period of its incorporation,
acquires rights at a price exceeding 10 per cent of the capital, from a person
who has subscribed shares at the incorporation of the company, this will require
a decision of the General Meeting of the Shareholders and art. 72, paragraph 2
shall apply to the transferred rights.
(2)(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) The transaction shall have effect after
entry of the decision of the General Meeting in the Commercial Register.
(3) Paragraphs 1 and 2 shall not apply to rights acquired in the course of the
company's usual activity, on the stock exchange or under the supervision of an
administrative or judiciary body.
Article 73c Payments to Partners and Shareholders (New, SG No. 58/2003)
Payments to partners and shareholders arising from participation stakes or
shares in a company which have been pledged or placed under an attachment shall
be made if the creditor which holds such pledge or attachment does not object
within one month following a written notice. In the case of an objection, the
amount due shall be deposited with a bank to secure the creditor.
Article 74 Repeal of a Resolution of the Company's General Meeting
(1) Every partner or shareholder may bring an action before the district court
of the company's seat for the repeal of a resolution of the general meeting when
such resolution is inconsistent with a mandatory provision of the law or with
the articles or, respectively, the Articles of Association of the company. The
action shall be brought against the company.
(2) The action shall be brought within 14 days of the date of the meeting when
the plaintiff was present or was duly notified, or otherwise within 14 days of
learning of the resolution, but not later than three months after the date of
the general meeting.
(3) A partner or shareholder may intervene in a proceeding in accordance with
the provisions of the Code of Civil Procedure . It may carry on the proceedings
even after the withdrawal of the original plaintiff.
(4) (New, SG No. 59/2007) The action shall be examined according to the
procedure established by Chapter Thirty-Three "Proceedings on Collective
Actions" of the Code of Civil Procedure, where the contested resolution has been
passed by the general meeting of a joint-stock company with issued bearer shares
or by an investment company of the open-end type. Exclusion from participation
shall not be admitted in this case.
Article 75 Subsequent Voiding of Annulled Resolution
(1) The instructions given by the court in repealing a general meeting
resolution concerning the interpretation of the law, the memorandum of
association or the Articles of Association shall be binding on the general
meeting whenever it discusses the same issue again.
(2) Resolutions or acts by the company's organs which are in contravention of an
effective court ruling are null and void. Each partner or shareholder may at any
moment refer to such nullity or request its proclamation by the court.
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CHAPTER ELEVEN
GENERAL PARTNERSHIP
Section I
General Provisions
Article 76 Definition
A general partnership shall be a company formed by two or more persons for the
purpose of effecting commercial transactions by occupation under a joint trade
name. The partners shall be liable jointly and severally and their liability
shall be unlimited.
Article 77 Trade Name
The trade name of a partnership shall consist of the surnames or trade names of
one or more of the partners with the extension "sabiratelno druzhestvo" [general
partnership] or "sadruzhie" ("s-ie") [partners].
Article 78 Content of Articles of Partnership
A partnership's articles shall be drawn up in writing with notarized signatures
of the partners and shall state:
1. (amended and supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006) the name and domicile or,
respectively, the trade name, the seat and standard identification code, as well
as the address of each partner;
2. (amended, SG No. 103/1993, supplemented, SG No. 124/1997) the trade name, the
seat, the head-office address, and the purposes of the partnership;
3. the type and amount of each partner's contribution and the valuation thereof;
4. the manner of distribution of profits and losses among the partners;
5. (amended, SG No. 103/1993) the manner of management and representation of the
partnership.
Article 79 Registration of the General Partnership
(1) The application for registration of the general partnership in the
commercial register shall be signed by all partners and the articles of
partnership shall be attached to it.
(2) Registered in the register shall be the information under Items 1, 2 and 5
of the preceding article.
(3) The persons authorized by the articles of partnership to represent the
partnership shall submit specimen signatures.
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Section II
Partners' Legal Relationships
Article 80 Primacy of the Articles of Partnership
The partners' legal relationships shall be governed by this Section, unless the
articles of partnership provide otherwise, with the exception of the provision
of Article 87.
Article 81 Compensation for Expenses and Damages
(1) A partner shall be entitled to reimbursement for necessary expenses incurred
in the course of the partnership's business and to compensation for damages
suffered in connection with such business.
(2) The partnership shall pay the interest as set by law on such expenses
incurred or damages suffered by a partner.
Article 82 Obligation to Pay Interest
A partner which is in arrears in paying its monetary contributions or receives
or, respectively, takes partnership money for itself without being entitled to
do so, shall owe the partnership the repayment of all such moneys and the
interest as set by law. Should the damages for the partnership be greater, the
partnership may seek compensation for the balance.
Article 83 Prohibition on Competition
(1) (Supplemented, SG No. 103/1993) A partner may participate in another company
or enter into transactions related to the purposes for which the partnership was
set up, on its own account or on account of a third party, only with the consent
of the other partners.
(2) (Amended, SG No. 103/1993) In case of a violation of para 1 the partnership
may request compensation for the damages suffered or state that it shall assume
the rights and obligations under the concluded transactions. The statement must
be made in writing within one month of acquiring knowledge of the transaction,
but not later than one year of its conclusion, and be forwarded to the partner
and the third party.
(3) The right to an action pursuant to the preceding paragraph shall expire
after three months from the date of the partners' becoming aware of the said
act, or after three years of the commitment of the said acts when the partners
have no knowledge of them.
Article 84 Management
(1) Each partner shall be entitled to take part in the management of the
partnership's business, except when management has been assigned with the
articles of partnership to one or several of the partners or to a third party.
(2) The consent of all partners shall be required for the acquisition or
disposal of real rights over real property, for the appointment of a manager who
is not a partner, or for executing an agreement for a cash loan exceeding a sum
fixed in the articles of partnership.
Article 85 Revocation of Management Assignment (Amended, SG No. 38/2006,
effective 1.07.2007 - amended, in relation to becoming effective, SG No.
80/2006)
The resolution to assign the management to one or several partners may be
revoked by the district court of the partnership's seat upon an action brought
by some of the partners, if the managers have committed a breach of their
obligations, as well as on other grounds provided for in the articles of
partnership. The judgement of the court shall be sent ex officio to the Registry
Agency for entry into the Commercial Register.
Article 86 Partner's Right to Exercise Control
A partner which does not participate directly in the management shall be
entitled to obtain information on the partnership's business, to inspect the
books, the partnership and other papers, and to ask for explanations from the
managers.
Article 87 Resolutions
Where the articles of partnership require that resolutions be adopted with a
majority vote, each partner shall be entitled to one vote. Resolutions shall be
recorded in the minutes book.
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Section III
Partners' Relationship With Third Parties
Article 88 Liability of the General Partnership (Amended, SG No.
103/1993)
When bringing an action against the partnership the plaintiff may also name as
defendants one or several of the partners. Forcible execution shall be directed
first against the partnership, and, in case of impossibility for satisfaction,
against the partners.
Article 89 Representation
(1) Each partner shall represent the partnership, unless the articles of
partnership provide otherwise.
(2) A limitation upon the representative powers of a partner shall not be
binding upon bona fide third parties if it is not registered in the commercial
register.
Article 90 Revocation of Representative Powers
The representative powers of a partner may be revoked pursuant to Article 85.
Article 91 Partners' Plea
A partner may, in addition to the partnership's pleas, make its personal pleas
before the partnership's creditors.
Article 92 Liability of Newly Admitted Partners
The liability for all of the partnership's debts of a newly admitted partner in
an existing partnership shall equal that of the other partners.
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Section IV
Dissolution of a Partnership and Termination of a Partners' Participation
Article 93 Grounds for Dissolution
A general partnership shall be dissolved upon:
1. (supplemented, SG No. 103/1993) expiration of its term or under other
circumstances provided in the articles of partnership;
2. the agreement of the partners;
3. declaring the partnership bankrupt;
4. where there is no other provision, death or the placing under judicial
disability of a partner or dissolution of a partner which is a legal person;
5. (amended, SG No. 63/1994) request of the trustee in bankruptcy in case of
bankruptcy of a partner;
6. notice of termination from a partner;
7. a court ruling in the cases established by law.
Article 94 Dissolution upon Notice from a Partner
Where a partnership has been formed for an indefinite period of time each
partner may request its dissolution by sending at least six months prior notice
in writing to all remaining partners, unless the articles of partnership provide
otherwise.
Article 95 Dissolution by Court Order Dismissal of Partner
(1) The district court may dissolve a partnership upon an action brought by a
partner when another partner has deliberately or in gross negligence omitted to
perform an obligation of its under the articles of partnership or the
performance of the obligation has become impossible. This rule shall also apply
whenever a partner acts against the interests of the partnership.
(2) Upon an action brought by a partner the court may, instead of dissolving the
partnership, dismiss the partner which is at fault.
Article 96 Dissolution upon Notice from a Private Creditor of a Partner
(1) The creditor of a partner which in the course of six months cannot be
satisfied by forcible execution upon the debtor's personal property may attach
that partner's liquidation share and request the dissolution of the partnership
upon a notice in writing pursuant to the procedure set forth in Article 94.
(2) A partnership shall not be dissolved in case the partnership or the
remaining partners repay the debt following the attachment pursuant to the
preceding paragraph. In this case only the participation of the debtor partner
shall be terminated, unless the partners decide otherwise.
Article 97 Perpetuation of Partnership
(1) The partners may provide in the articles that the partnership shall continue
to exist in the case of termination of the participation of a partner. In this
case the remaining partners shall buy out the share of the partner which has
terminated its participation, and in the case of a partner's death, those of its
heirs who wish shall be admitted as partners. The heirs shall state their intent
to be admitted as partners not later than three months from the date of the
opening of the succession.
(2) In case the heirs do not wish to be admitted as partners, as well as in case
of termination of the participation of a partner, the partnership shall pay the
value of the share in the partnership's assets of the decedent or the partner
which has terminated its membership, and their share in the annual profits for
the period up to the death or termination of the participation.
Article 98 Limitation
(1) The right of action against a partner for obligations of the partnership
shall expire by limitation after five years, except where the right of action
against the partnership is subject to a shorter limitation.
(2) ( Supplemented, SG No. 58/2003) The limitation period shall run from the
date on which the dissolution of the partnership, its transformation or the
termination of the participation of the partner, is registered in the commercial
register.
(3) An interruption of the limitation with respect to the dissolved partnership
shall also apply to those partners which were partners at the time of the
dissolution.
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CHAPTER TWELVE
LIMITED PARTNERSHIP
Section I
General Provisions
Article 99 Definition
(1) A limited partnership shall be formed with articles of partnership between
two or more persons for carrying out commercial activities under a common trade
name, whereby for the partnership's obligations one or more of the partners
shall be liable jointly and severally and their liability shall be unlimited,
and the remaining partners' liability shall not exceed the amount of the agreed
upon contribution.
(2) (Repealed, renumbered from Paragraph 3, SG No. 103/1993) The provisions for
the general partnership shall apply mutatis mutandis to the limited partnership,
to the extent this chapter does not provide otherwise.
Article 100 Form
The articles of partnership shall be drawn up in writing with notarized
signatures of the partners.
Article 101 Trade Name
(1) The company's trade name shall contain the extension "komanditno druzhestvo"
[limited partnership] or the abbreviation "KD" and the name of at least one of
the general partners.
(2) The names of limited partners shall not be incorporated in the trade name of
a limited partnership, but in case this has occurred those partners shall be
deemed to bear unlimited liability vis-а-vis the creditors of the partnership.
Article 102 Content of the Articles of Partnership
A limited partnership's articles shall state:
1. the trade name of the partnership;
2. the seat and the registered office;
3. the purposes for which the partnership is set up;
4. (supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) the name and domicile or, respectively, the
trade name, the seat and standard identification code, as well as the address of
each partner;
5. (repealed, SG No. 84/2000);
6. the type and amount of the partners' contributions;
7. the manner of distribution of profits and losses among the partners;
8. the manner of management and representation of the partnership.
Article 103 Registration (Amended, SG No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006)
A limited partnership shall be registered with the commercial register by the
general partners, which shall file the articles of partnership and specimen
signatures.
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Section II
Partners' Legal Relationships
Article 104 Primacy of the Articles of Partnership
The partners' legal relationships, to the extent the articles of partnership
contain no provision to the contrary, shall be governed by this Section.
Article 105 Management
A limited partnership shall be managed and represented by the general partners.
A limited partner has no right to manage the partnership and block resolutions
of the general partners.
Article 106 Acts by a Limited Partner
Should a limited partner effect transactions in the name and on behalf of the
partnership without being the partnership's manager or agent it shall be
personally liable, except when the partnership ratifies the transaction.
Article 107 Prohibition Concerning an General Partner
The rule of Article 83 shall apply to a general partner.
Article 108 Limited Partner's Rights
A limited partner may inspect the partnership's books and request a transcript
of its annual financial statement. In case of refusal the district court shall,
on the motion of such partner, order that these be placed at the disposal of the
partner.
Article 109 Limited Partner's Participation in Profits and Losses
(1) Where a limited partner has not paid in full the stipulated contribution,
such contribution shall be deducted from its share of the profits.
(2) A limited partner shall participate in losses up to the amount of the
stipulated contribution. It shall not be bound to pay back any profits it has
received to offset subsequent losses.
Article 110 Prohibition on Distribution of Profits
Where at the end of a calendar year it is established that a partnership has
shown losses which affect the contributions made, no profits shall be
distributed before the contributions have been restored to their stipulated
amounts.
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Section III
Partners' Legal Relationships With Third Parties
Article 111 Liability of Limited Partner
A limited partner shall be liable towards the partnership's creditors to the
extent of its stipulated contribution, even when it has not been paid in full.
Article 112 Liability Prior to Registration
A limited partner shall bear unlimited liability with respect to transactions
entered into by it in the name of the partnership prior to its formation, or
after such formation whenever the creditor did not know that it was contracting
with a limited partner.
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CHAPTER THIRTEEN
LIMITED LIABILITY COMPANY
Section I
General Provisions
Article 113 Definition
A limited liability company may be formed by one or more persons which shall be
liable for the company's obligations with their contributions to the company's
registered capital.
Article 114 Form of Memorandum of Association
(1) (New, SG No. 103/1993) The Memorandum of Association shall be executed in
writing.
(2) (Previous Article 114, SG No. 103/1993) A partner may be represented by an
agent holding a special power of attorney with notarized signature.
(3) (New, SG No. 103/1993) When the limited liability company is formed by one
person, a constitutive deed shall be drawn up instead of Memorandum of
Association.
Article 115 Content of Memorandum of Association
The Articles of Association shall state:
1. (amended and supplemented, SG No. 124/1997) the company's trade name, seat,
and head-office address;
2. the purposes and the time period for which the company is being set up;
3. (supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) the name or, respectively, the trade name,
the seat and standard identification code, as well as the address of each
partner;
4. (supplemented, SG No. 84/2000) the registered capital. Where the full amount
has not been paid at incorporation, the articles shall set the time periods and
terms for payment. The time period for paying up the full amount of the capital
shall not exceed two years after the company's registration, or the increase of
capital respectively;
5. the interests of the partners;
6. the management and manner of representation;
7. the privileges of the partners, where agreed upon;
8. other rights and obligations of the partners.
Article 116
Trade Name
(1) The trade name of a company shall contain the extension "druzhestvo s
ogranichena otgovornost" [limited liability company] or the abbreviation "OOD".
(2) Should all the capital be owned by one person, the trade name shall contain
the extension "ednolichno OOD" [single person limited liability company]
Article 117
Capital and Shares
(1) (Amended, SG No. 100/1997) The registered capital of a limited liability
company shall be not less than BGN 5,000. It shall consist of the interests of
the company's partners, and no interest shall be smaller than BGN 10,.
(2) (Amended, SG No. 66/2005) The sum total of all interests shall be equal to
the registered capital, and the value of each interest shall be a multiple of 10
(3) The interests of the individual partners may be of unequal value.
(4) An interest may be held jointly by several persons.
Article 118
Liability of Founders
(1) The founders shall be liable jointly and severally before the company for
damages caused in the course of its formation, if they have not acted with due
care.
(2) The founders shall not be entitled to remuneration for the formation of the
company from the registered capital.
Article 119
Registration
(1) For registration of a company in the commercial register it shall be
necessary:
1. to file the Articles of Association;
2. to have an appointed manager or managers;
3. (amended, SG No. 84/2000) each partner to have paid at least one third of its
interest, but not less than BGN 10;
4. (amended, SG No. 100/2008) at least 35 per cent of the registered capital to
have been paid.
(2) (Amended, SG No. 50/2008) The particulars under Items 1, 2, 3, 4 (only the
amount of the capital) and 6 of Article 115 shall be recorded in the register
and shall be disclosed.
(3) (New, SG No. 114/1999, amended, SG No. 39/2005) For recording in the
commercial register the performance of a business activity as an investment
intermediary and of any other activity for which a separate law stipulates the
performance thereof after obtaining permission from a government authority, the
respective license or permission shall be presented.
(4) (New, SG No. 84/2000) In case of amending or supplementing the Articles of
Association, a copy of the articles containing all amendments and supplements
and certified by the body representing the company, shall be presented at the
Commercial Register.
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Section II
Partners' Rights and Obligations
Article 120
Shares
(1) Each partner shall pay up or contribute its interest as provided in the
Articles of Association.
(2) (Repealed, SG No. 84/2000).
Article 121
Consequences of Failure to Pay Up or Contribute One's Share
(1) The failure to pay up or contribute an interest shall constitute grounds for
the expulsion of a partner from the company. A partner which has failed to pay
up or contribute its interest within a specified period shall owe interest at a
rate determined by operation of law, and compensation for damages in excess of
such interest.
(2) Where the interest cannot be paid up or contributed by the partner owing
such payment or contribution, and cannot be sold to a third party, the remaining
partners must pay up the balance in proportion to their interests or reduce the
company's registered capital in accordance with established procedures.
Article 122
Admitting a New Partner
A new partner shall be admitted by the general meeting upon an application in
writing, in which it shall state that it accepts the terms of the Articles of
Association. The resolution to admit the partner shall be registered in the
commercial register.
Article 123
Partners' Rights
Each partner shall be entitled to take part in the management of the company, in
the distribution of profits, to be informed of the company's affairs, to review
the company's books and to liquidation proceeds.
Article 124
Partners' Obligations
The partners must pay up or contribute their interests, take part in the
management of the company, provide assistance for the carrying out of its
activities, as well as carry out the resolutions of the general meeting.
Article 125
Termination of Participation in a Company
(1) The participation of a partner shall be terminated upon:
1. death or disability;
2. expulsion;
3. dissolution and liquidation, in the case of a legal person;
4. bankruptcy.
(2) A partner may terminate its participation in a company with a notice in
writing made at least 3 months prior to the termination.
(3) Accounts shall be settled on the basis of the balance sheet for the last day
of the month of termination of the participation.
Article 126
Expulsion of a Partner
(1) (Amended, SG No. 58/2003) A partner which has not paid up or contributed its
interest stake shall be deemed expelled is it fails to pay up or pay in its
stake within a time limit as determined additionally by the general meeting,
which cannot be less than one month. The time period shall be determined by a
majority of one half of the capital. The manager shall inform the partner in
writing of such additional time period and warn it of the expulsion.
(2) In the case of para 1 the partner shall lose its title to any contributions
made.
(3) A partner may be expelled by the general meeting following a notice in
writing where it:
1. fails to perform its obligations for providing assistance for the carrying
out of the activities of the company;
2. fails to abide by resolutions of the general meeting;
3. acts against the interests of the company.
4. (new, SG No. 84/2000, amended, SG No. 58/2003) fails to make an additional
cash payment, in case the partner has not exercised its right to retire referred
to in article 134, paragraph (2).
Article 127
Company Share
Each partner shall have a company interest in the company's assets the amount of
which shall be determined in proportion to its interest in the registered
capital, unless otherwise agreed.
Article 128
Certificate of Participation
The certificates issued to the partners for evidencing their participation in
the company shall not be negotiable securities.
Article 129
Transfer of Shares
(1) An interest in a limited liability company may be transferred and inherited.
The transfer of an interest from one partner to another shall be unrestricted,
and the transfer to third parties shall be subject to the provisions for
admitting new partners.
(2) An interest in a limited liability company shall be transferred with
notarized signatures and shall be registered in the commercial register.
Article 130
Liability upon Transfer
The transferee shall be liable jointly and severally with the transferor for any
payments to the registered capital due at the date of transfer.
Article 131
Partition of a Share
The partition of an interest shall be admissible only with the consent of the
partners, unless otherwise agreed.
Article 132
Joint Ownership of an Interest
Where one interest belongs to several persons they may exercise their rights
over it only jointly. They shall be liable jointly and severally for any
obligations arising from such interest. The joint owners of the interest shall
designate a person to represent them before the company.
Article 133
Profits and Payments
(1) The partners cannot claim their interests as long as the company exists.
They are only entitled to part of the profits in proportion to their interests,
unless otherwise agreed.
(2) No interest on the partner's profits may be agreed upon.
Article 134
Additional Monetary Contributions
(1) For covering losses and in case of temporary shortage of cash the partners
may be required, by a general meeting resolution, to make additional monetary
contributions within a fixed period. The additional contributions shall be in
proportion to the respective interests in the capital, unless otherwise
determined.
(2) (Amended, SG No. 58/2003) A partner which has not voted for the decision
referred to in paragraph (1) shall have the right to terminate its participation
in the company in accordance to article 125, paragraphs (2) and (3). This right
shall be exercisable within one month following the meeting, for partners that
have attended or have been legitimately invited, or following the notice, for
all other partners.
(3) (Amended, SG No. 58/2003) The additional contributions shall not affect the
company's registered capital. It may be agreed that the company shall pay
interest on them. Article 73c shall not apply to refunds of additional cash
contributions.
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Section III
Management
Article 135
Types of Organs
(1) The company's organs shall be:
1. the general meeting;
2. the manager (managers).
(2) The manager does not necessarily have to be a partner.
Article 136
General Meeting of Partners
(1) The general meeting of partners shall consist of the partners.
(2) The company's manager shall take part in the general meeting's sittings in a
consultative capacity.
(3) Where the number of employees exceeds 50, they shall be represented in the
general meeting in a consultative capacity.
Article 137
Powers of the General Meeting
(1) The general meeting shall:
1. amend the Articles of Association;
2. (amended, SG No. 103/1993) admit and expel partners, give consent on the
transfer of an interest to a new partner;
3. approve the annual report and balance sheet, distribute the profits and
resolve on their payment;
4. resolve on the increase or decrease of the registered capital;
5. appoint a manager, fix his remuneration and relieve him of liability;
6. resolve on setting up or closing down branches and participation in other
companies;
7. resolve on the acquisition or alienation of real property and real rights
therein;
8. resolve on bringing a company action against the manager or comptroller and
appoint an attorney to proceed with the suits against them;
9. resolve on additional monetary contributions.
(2) Each partner has as many votes in the general meeting as its interest of the
capital, unless the articles provide otherwise.
(3) (Amended, SG Nos. 103/1993, 84/2000, supplemented, SG No. 58/2003)
Resolutions under Items 1, 2 and 9 of para 1 shall be adopted with a majority of
more than three quarters of the capital, and resolutions under Item 4 -
unanimously; a greater majority may be provided in the Articles of Association.
The partner whose expulsion is put to a vote shall not vote and its interest
stake shall be deducted from the capital when determining the majority. All
remaining resolutions shall be adopted with a majority of the capital, unless
the articles provide otherwise.
(4) The partners may vote by proxy only when such proxy holds a special power of
attorney in writing; the above rule shall not apply to partners which are legal
persons or to agents by operation of law.
(5) The general meeting shall adopt resolutions on labor and social issues only
after hearing the position of a representative of the company's employees.
Article 138
Convening a General Meeting
(1) A general meeting shall be convened by the manager at least once every year.
(2) The manager shall also convene a general meeting upon the request in writing
of the partners whose interests amount to at least one tenth of the capital.
Should the manager fail to convene a general meeting within two weeks, the
partners which have requested its convening shall be entitled to do so.
(3) (Supplemented, SG No. 58/2003) The manager shall convene a general meeting
immediately should the losses exceed one fourth of the registered capital, and
also when the net worth of the company's property under article 247a, paragraph
(2) should fall below the amount of the registered capital.
Article 139
Notice of General Meeting
(1) The general meeting shall be convened by a notice in writing received by
each partner at least 7 days before the date of the meeting, unless the articles
provide otherwise. The notice shall specify the business to be transacted.
(2) general meeting resolutions may be adopted in absentia when all partners
have stated in writing their consent for the resolution.
Article 140
Registration of Resolutions
(1) The general meeting resolutions which are related to registrations pursuant
to Article 119, para 2 shall be registered in the commercial register.
(2) Para 1 shall apply to the resolutions of the owner of a single person
company.
(3) (New, SG No. 84/2000, amended, SG No. 58/2003) Resolutions related to
amending or supplementing the Articles of Association or termination of the
company shall come into effect after their entry in the Commercial Register.
(4) (New, SG No. 58/2003) Increase or reduction of capital, admission or
expulsion of a partner, transformation of the company, election or dismissal of
a manager, as well as appointment of a liquidator shall come into effect after
their entry in the Commercial Register.
Article 141
Management and Representation
(1) The manager shall organize and direct the activities of the company in
accordance with the law and the general meeting resolutions.
(2) (Supplemented , SG No. 84/2000) The company shall be represented by the
manager. Where several managers have been appointed each one of them may act
independently, unless the articles provide otherwise. Other restrictions of the
representative power of the manager shall not have effect with regard to third
persons.
(3) (Amended, SG No. 84/2000, No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006) The name of the manager, who
shall present a notarized consent with a specimen signature, shall be registered
in the commercial register.
(4) (New, SG No. 58/2003) The empowerment of the manager can be withdrawn at any
time and his name can be removed from the commercial register.
(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) The manager may
request his 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, the manager may declare for registration this
circumstance himself and that entry shall be made regardless of whether another
person has been elected to replace him.
(6) (New, SG No. 66/2005) The empowerment and its removal will have effect in
regard to good faith third parties as of its registration.
(7) (New, SG No. 58/2003, renumbered from Paragraph 6, SG No 66/2005) Relations
between the company and the manager shall be regulated under a management
contract. The contract shall be executed in writing on behalf of the company by
a person authorized by the general meeting of partners, or by the sole
proprietor.
Article 142
Prohibition on Competition
(1) Without the consent of the company the manager may not:
1. effect commercial transactions in his own or in a third party's name;
2. participate in partnerships and partnerships limited by shares, and in
limited liability companies;
3. hold positions in managing organs of other companies.
(2) The limitations under para 1 shall apply when the activities carried out are
similar to those of the company.
(3) (Amended, SG No. 58/2003) For violations of his obligations under para 1 the
manager shall owe indemnity for damages caused to the company.
Article 143
Company Books
(1) The company shall keep a book of interests and minutes book on the general
meeting resolutions.
(2) The value of each partner's interest, the payments made and all relevant
changes thereto shall be recorded in the book of interests.
(3) The manager shall be responsible for the regular keeping of the company
books.
Article 144
Comptroller
(1) The articles may provide for the appointment of a comptroller (comptrollers)
who shall supervise the observance of the articles, the taking of proper care of
the company's property and shall report to the general meeting.
(2) The following may not be comptrollers:
1. the managers, their deputies and company employees;
2. spouses, descendants or ascendants and collateral relatives to the third
degree of the persons under the preceding Item;
3. persons who with a sentence have been deprived of the right to hold a
position of financial accountability.
(3) In a single person company the comptroller shall be appointed by the owner.
Article 145
Liability of the Manager and the Comptroller
The manager and the comptroller shall be financially liable for damages caused
to the company.
Article 146
Auditors
(1) (Supplemented, SG No. 38/2006, effective 1.07.2007 - amended, in respect of
entry into effect, SG No. 80/2006, amended, SG No. 67/2008) The company's annual
financial statement shall be audited by one or several auditors, who shall be
registered auditors in the cases provided for by a law.
(2) Such audit shall be a condition for approving the annual financial
statement.
(3) The auditors shall be appointed by the general meeting before the expiration
of the calendar year. They shall be liable for the proper and unbiased audit and
for maintaining confidentiality.
(4)(New, SG No. 84/2000, amended, SG No. 66/2005, No. 38/2006, effective
1.07.2007 - amended, in relation to becoming effective, SG No. 80/2006) The
adopted annual financial statement shall be presented at the Commercial
Register.
Article 147
Management of a Single Person Limited Liability Company
(1) The single owner of the capital shall manage and represent the company
either personally or through an appointed by it manager. In case the owner is a
legal person the manager of such legal person or a person designated by him
shall manage the company.
(2) (Supplemented , SG No. 84/2000) The single owner of the capital shall
resolve on the issues falling within the powers of the general meeting, minutes
of which shall be taken in the relevant form for the general meeting
resolutions.
(3) (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.
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Section IV
Amending the Articles of Association
Article 148
Increase of Capital
(1) The registered capital may be increased through:
1. increasing the value of the interests;
2. subscribing new interests;
3. admitting new partners.
(2) The partners may increase the value of the interests pro rata to their
holdings, unless the Articles of Association or the general meeting resolution
provide otherwise.
Article 149
Reduction of Capital
(1) (Amended, SG No. 70/1998, No. 84/2000) The registered capital may be reduced
to not less than the minimum amount, established by law, by a resolution to
amend the Articles of Association observing the requirements of Articles 150 and
151. In such a case, a simultaneous reduction or increase of the registered
capital may be made under the procedure of article 203.
(2) The resolution shall state the purpose of the reduction, its amount and the
manner through which it shall be accomplished.
(3) The reduction may be effected through:
1. reducing the value of interests;
2. cancellation of the interest of a partner which has terminated its
participation;
3. relieving of the obligation to pay up the unpaid portion of the registered
capital.
Article 150
Notice to Creditors
(1) (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 resolution to
reduce the registered capital shall be submitted to the Commercial Register and
published. With the publication thereof it shall be considered that the company
has declared readiness to provide security for claims or to pay its obligations
as of the moment of publication to the creditors which do not agree with the
reduction.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) The creditor's consent for the reduction
shall be assumed if within three months of the publication they do not express
in writing their objection.
(3) (Repealed, SG No. 84/2000).
Article 151
Registration of the Reduction
(1) The amendment to the articles with which the registered capital is reduced
shall be registered upon expiration of the time period specified in the previous
article.
(2) Attached to the application for registration shall be proof of observance of
the requirements of Article 150 and a statement in writing of the manager that
either security has been provided or the debt has been repaid to the creditors
which have not consented to the reduction.
Article 152
Creditors' Protection (Heading amended, SG No. 104/2007)
(1) (Redesignated from Article 152, SG No. 104/2007) If the data provided by the
managing director for recordation of the reduction are untrue, he shall be
liable for the damages caused to the creditors to the extent they could not be
satisfied from the company. Where there are several managing directors, they
shall be liable solidarily.
(2) (New, SG No. 104/2007) Any creditor referred to in Article 150 (1), who has
expressed his opposition to the time limit under Article 150 (2) and has not
received satisfaction or sufficient security of the claim thereof within the
said time limit, may approach the court with a motion to duly grant an
injunction for the claim thereof according to the procedure for securing of
actions by means of a garnishment or preventive attachment. The injunction shall
be dissolved if recordation of the reduction of capital is refused or if the
creditor receives satisfaction of the claim thereof.
Article 153
Payments Pursuant to Reduction
(Supplemented, SG No. 84/2000)
Payments to the partners pursuant to a reduction of the registered capital may
be made only after the reduction has been registered, and after the creditors
who have not agreed with the reduction have received security or payment.
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Section V
Dissolution and Liquidation of the Company
Article 154
Dissolution of the Company
(1) The company shall be dissolved:
1. with the expiration of the term set in the articles;
2. (amended, SG No. 84/2000) upon decision of the partners adopted with a three
quarters majority of the interests, unless the articles provide for a greater
majority;
3. through a consolidation or merger with a joint-stock company or another
limited liability company;
4. upon being declared bankrupt;
5. by a decision of the district court in cases provided for by law.
(2) The articles may provide for other grounds for dissolution of the company.
Article 155
Dissolution by a Decision of the Court
(Amended, SG No. 38/2006, effective 1.07.2007 - amended, in
relation to becoming effective, SG No. 80/2006)
The company may be dissolved by a decision of the district court of its
registered office upon:
1. an action by the partners showing serious cause. The action shall be brought
against the company if the plaintiffs' interests represent more than one fifth
of the registered capital;
2. (amended, SG No. 84/2000) an action by the public attorney where the
activities of the company are in contravention to the law.
3. (new, SG No. 58/2003) an action by the public attorney where for three months
there has not been any manager registered for the company.
Article 156
Liquidation of a Company
(1) In the case of dissolution of a company pursuant to Article 154, Items 1, 2
and 5 and Article 155 a liquidation procedure shall be initiated.
(2) The company's liquidator shall be its manager, except where another person
has been appointed with the articles or with a resolution of the general
meeting.
(3) Upon request of the comptroller or of partners holding at least one tenth of
the interests the court may appoint another liquidator.
(4) The liquidation of the company shall be performed pursuant to Chapter
Seventeen.
Article 157
Dissolution of a Single Person Limited Liability Company
(1) A company in which the capital is owned by a single natural person shall be
dissolved upon the death of such person, except where provided otherwise or
where the heirs wish to continue its activities.
(2) Where the capital is owned by a single legal person the company shall be
dissolved with the dissolution of that legal person.
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CHAPTER FOURTEEN
JOINT-STOCK COMPANY
Section I
General Provisions
Article 158
Definition
(1) A joint-stock company is a company the capital stock of which is divided
into shares. The company shall be liable before its creditors with its assets.
(2) The trade name of the joint-stock company shall include the extension
"aktsionerno druzhestvo" [joint-stock company] or the abbreviation "AD".
Article 159
Number of Founders (Amended, SG No. 84/2000)
(1) A joint-stock company may be found by one or more natural or legal persons.
(2) When a joint-stock company is formed by one person, a constitutive deed
shall approve the Statutes and appoint the first supervisory board or board of
directors.
(3) The constitutive deed shall be drawn up in writing.
Article 160
Founders
(1) (Amended, SG No. 84/2000) Founders are those persons who have subscribed
shares at the constituent meeting.
(2) Persons declared bankrupt may not be founders.
Article 161
Capital and Shares
(1) The capital stock and the value of the shares shall be designated in leva.
(2) (Amended, SG Nos. 100/1997, 84/2000) The minimum value of the capital stock
of a joint-stock company shall be 50 000 leva.
(3) (Amended, SG Nos. 25/1992, 70/1998) The minimum amount of the capital stock
required for performing banking, insurance activities or voluntary health
insurance activities shall be determined by a separate law.
(4) (Supplemented, SG Nos. 84/2000, 66/2005) The capital stock must be fully
subscribed. The company may not subscribe shares from its capital. Should this
prohibition be violated at the incorporation of the company, the founders shall
be jointly liable for the subscribed shares. If any one 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.
Article 162
Nominal Value of a Share (Amended, SG No. 84/2000)
The minimum nominal value of a share shall be 1 lev. Larger nominal values of
shares must be in full levs.
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Section II
Incorporation
Article 163
Constituent Meeting
(Amended, SG Nos. 63/1995, 84/2000)
(1) A joint-stock company shall be founded at a constituent meeting attended by
all the persons subscribing for shares. A founder may be represented by a
special proxy whose signature has been certified by the notary public.
(2) Shares shall be subscribed at the constituent meeting.
(3) The constituent meeting shall:
1. take a decision for the incorporation of the company;
2. adopt the Statutes;
3. establish the amount of the incorporation costs;
4. elect a supervisory board, respectively a board of directors.
(4) The decisions pursuant to paragraph 3, Items 1 and 2 shall be adopted
unanimously; minutes shall be taken pursuant to article 232.
(5) When a joint-stock company is formed by one person, a constitutive deed
shall be drawn up.
Article 164
Content of the Prospectus
(Repealed, SG No. 63/1995)
Article 165
Content of the Statutes
(Amended, SG No. 84/2000)
The Statutes shall contain:
1. the company's trade name, seat, and head-office address;
2. the purposes, and the time period, if any;
3. (supplemented, SG No. 66/2005) the amount of the capital, as well as the
portion thereof, which must be paid-in at the foundation of the company, the
type and number of shares, the rights of the individual classes of shares, any
special terms of their transfer, as well as the nominal value of the individual
share;
4. the bodies of the company, their mandate and number of members;
5. the type and value of the non-monetary contributions, if any, the persons
making them, the number and nominal value of the shares which they shall be
given;
6. the advantages, if any, which the founders, by name, have reserved for
themselves;
7. the terms and procedure for issuing callable stock, if such is foreseen;
8. the manner of distribution of profits;
9. the manner of calling the General Meeting;
10. other terms with respect to the incorporation, existence and dissolution of
the company.
Article 166
Contributions
(1) (Amended, SG No. 84/2000) Monetary payments shall be made to a fund-raising
bank account opened by the managing board, or the board of directors
respectively, in the company's name, with an indication of the name of the
payer, and any payments with deposited sums shall be effected with the unanimous
decision of this body.
(2) The provisions of Articles 72 and 73 shall apply mutatis mutandis to
non-monetary contributions.
(3) (New, SG No. 84/2000) If, within three months, the managing board,
respectively the board of directors, does not certify to the bank that the
company has applied for registration, the payers may withdraw their payments in
full. The members of the respective board shall be jointly liable for the
payment of the deposited sums.
Article 167
Interim Certificate
(1) (Amended, SG No. 84/2000) For payments or contributions for subscribing to
shares the shareholders shall receive interim certificates signed by an
authorized member of the managing board, or the board of directors respectively.
(2) The shareholders shall receive their shares upon presentation of interim
certificates.
Article 168
Constituent Meeting (Repealed, SG No. 84/2000)
Article 169
Subscription (Amended, SG No. 58/2003)
A joint-stock company may be incorporated by subscription to raise capital only
if a law specifically provides for the conditions and procedure to do so.
Article 170
Functions of the Constituent Meeting (Repealed, SG No. 84/2000)
Article 171
Incorporation of a company with subscribed capital (Repealed, SG No. 84/2000)
Article 172
Content of the Statutes (Supplemented, SG No. 124/1997, repealed, No. 84/2000)
Article 173
Liability of Founders (Repealed, SG No. 84/2000)
Article 174
Requirement for Registration of the Company
(1) For the registration of a joint-stock company in the commercial register it
shall be necessary that:
1. the Articles of Association have been adopted;
2. the full amount of the capital stock has been subscribed;
3. (amended, SG No. 84/2000) the part of the value of each share as provided in
the Articles of Association has been paid up, but not less than 25 per cent of
the nominal value or issue price of each share as provided in the Articles of
Association;
4. (supplemented, SG No. 58/2003) the members of the board of directors or,
respectively, the supervisory and managing board have been appointed;
5. the remaining requirements of the law have been fulfilled.
(2) (Amended, SG No. 84/2000, supplemented, SG No. 58/2003, amended, SG No.
38/2006, effective 1.07.2007 - amended, in relation to becoming effective, SG
No. 80/2006) The data pursuant to Article 165, Items 1 - 4, 5 (only the type and
the value of the non-monetary contribution) and 10, and the names of the members
of the board of directors, or, respectively, the supervisory and managing board,
shall be registered in the commercial register. The minutes of the constituent
meeting and a list of the persons who have subscribed shares at the
incorporation, certified by the managing board or the board of directors, shall
be attached to the application for entry. Should the shares be acquired by one
person after the incorporation of the company, the name, respectively the trade
name and the standard identification code of the shareholder shall be entered in
the register.
(3) (New, SG No. 114/1999, amended, SG No. 39/2005) For recording in the
commercial register the performance of banking and insurance activity, activity
as a stock exchange, as an investment intermediary, investment company,
management company and of any other activity for which a separate law stipulates
the performance thereof after obtaining permission from a government authority,
the respective license or permission shall be presented.
(4) (New, SG No. 84/2000) Should the Articles of Association be amended or
supplemented, a copy of the Articles of Association with the amendments as of
the respective date, certified by the person(s) representing the company, shall
be provided to the commercial register.
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Section III
Shares
Article 175
Nominal Value of the Shares. Denominations
(1) A share shall be a security which shall attest to the fact that its owner
participates in the capital stock with the nominal value indicated on it.
(2) A joint-stock company may not issue shares of a different nominal value.
(3) Shares may be issued in denominations of 1, 5, 10 and multiples of 10
shares.
Article 176
Issue Price
(1) The issue price is the price at which the shares shall be purchased by the
founders or, respectively, the subscribers in case the capital is raised through
subscription.
(2) The issue price shall not be lower than the nominal value. Shares may also
be subscribed at a price higher than the nominal value.
(3) The difference between the nominal value and the issue price shall be set
aside for the company's reserve fund.
Article 177
Indivisibility
Shares are indivisible. Where a share belongs to several persons they shall
exercise their rights in it jointly by designating a proxy.
Article 178
Types of Shares
(1) Shares may be registered or bearer shares. Preferred shares may also be
issued.
(2) (New, SG No. 84/2000) A joint-stock company may also issue book-entry
shares. The issuance and disposal of book-entry shares shall be done following a
procedure established by a law.
(3) (Renumbered from Paragraph 2, SG No 84/2000) Bearer shares shall not be
delivered until payment of their nominal value or issue price.
(4) (Renumbered from Paragraph 3, SG No 84/2000) Where bearer shares are
delivered before payment of the full issue price the amount of the installments
shall be indicated on them.
Article 179
Shareholders' Register
The joint-stock company shall keep a shareholders' register in which the names
and addresses of the owners of registered shares shall be recorded and the type,
nominal value and issue price, quantity and serial numbers of the shares shall
be indicated. The same shall be applied for interim certificates.
Article 180
Exchange of Shares (Amended, SG No. 84/2000)
Bearer shares shall be exchanged for registered shares and vice versa upon
request of the shareholder after payment in full of their price, unless the
Articles of Association provide a procedure for this.
Article 181
Shareholders'' Rights
(1) A share entitles its owner to one vote in the general meeting of
shareholders, to a dividend and to a share in the assets in case of liquidation
in proportion to the nominal value of the share.
(2) Where a company issues shares with special rights this must be indicated and
provided for in the Articles of Association.
(3) (Supplemented, SG No. 84/2000) The shares providing equal rights form a
separate class. Restriction of the rights of individual shareholders of one
class shall not be allowed.
Article 182
Preferred Shares
(1) (Supplemented, SG No. 103/1993) Preferred shares may provide a guaranteed or
additional dividend or share in the company's assets in case of liquidation, as
well as other rights provided for in this Act or the Articles of Association.
The Articles of Association may provide that preferred shares have no voting
rights, which must be indicated on the respective share.
(2) Preferred shares having no voting rights shall be included in the nominal
value of the capital stock.
(3) (New - SG No. 63/1995) It shall not be allowed more than 1/2 of the shares
to be non-voting shares.
(4) (Renumbered from Paragraph 3, SG No. 63/1995) Where a dividend due from a
preferred share without voting rights is not paid in the course of 1 year and
the delayed payment is not made during the following year together with the
dividend due for that following year, the preferred share shall acquire voting
rights pending payment of the delayed dividends. In this case the preferred
shares shall be taken into account in determining the quorum and majority.
(5) (Renumbered from Paragraph 4, SG No 63/1995) In order to adopt a resolution
with which the advantages arising from the nonvoting preferred shares are to be
restricted, it shall be necessary to obtain the consent of the preferred
shareholders, which shall convene at a separate meeting. The meeting may conduct
business if not less than 50 per cent of the preferred shares are represented.
Resolutions shall be adopted with a vote of at least three quarters of the
shares so represented. The preferred shares shall acquire the right to vote upon
the removal of the advantages.
Article 183
Contents of a Share
(1) A share shall contain:
1. the designation `share' for a denomination of one or `shares' for larger
denominations, preceded by the respective number thereof;
2. type of the shares;
3. the number of the denomination and the serial numbers of the shares comprised
therein;
4. the trade name and seat of the joint-stock company;
5. the amount of the capital stock;
6. the total number of shares, their individual nominal value and their
denomination structure;
7. the coupons and their maturity;
8. the signatures of two persons having authority to bind the company, and the
date of issue.
(2) (New - SG No. 63/1995) A printed signature on the share shall also be
considered valid signature.
(3) (Renumbered from Paragraph 2, SG No 63/1995) Filled in on the face of a
registered share shall be the name of its first owner.
Article 184
Coupons
(1) Unless otherwise provided in the Articles of Association, shares shall be
issued with dividend coupons for 20 years.
(2) Coupons may not be transferred separately from the shares.
(3) A coupon shall carry the designation `Coupon', the trade name of the
joint-stock company, the number of the coupon, indication as to the share and
its denomination, and the year for which dividend is payable on presentation
thereof.
Article 185
Disposal with shares
(Title amended, SG 58/2003)
(1) (Supplemented, SG No. 58/2003) Bearer shares shall be transferred and
pledged by delivery.
(2) Registered shares shall be transferred by endorsement which, to be binding
on the company, must be recorded in the registered shareholders register. The
Articles of Association may provide for other conditions for the transfer of
registered shares.
(3) (New, SG No. 58/2003) Registered shares shall be pledged by endorsement with
a qualification "as security", "as pledge", or another phrase referring to
collateral. The pledge shall be effective with respect to the company as from
its registration in the book of registered shareholders. Voting rights attached
to pledges shares shall be exercised by the shareholder unless the pledge
agreement provides otherwise. Article 473 shall not apply.
Article 186
Liability of Transferor of Registered Shares
The transferor of registered shares which have not been fully paid up or from
which other obligations towards the company arise shall be liable jointly and
severally with the transferee. The transferor's liability shall lapse upon the
termination of a period of two years from the date that the transfer was
recorded in the shareholders register.
Article 187
Transfer of Interim Certificates
(1) An interim certificate may not be transferred prior to the incorporation of
a company.
(2) Transfers of interim certificates shall be subject to the provisions of
Article 185, para 2.
(3) (New, SG No. 104/2007, effective 1.07.1991) The transfer of an interim
certificate shall have the same effect as a transfer of the shares certified
thereby.
Article 187a
Acquisition of own shares (New, SG No. 63/1995, amended, SG No. 70/1998, No. 114/1999,
repealed, new, SG No. 84/2000)
(1) A company may acquire its own shares only:
1. for reduction of capital under Article 200, Item 2;
2. (amended, SG No. 66/2005) in the case of legal succession, except for
transformation;
3. if it is free;
4. if it is involved in securities transactions by occupation and acquires the
shares in executing the order of a third person;
5. in the case of expulsion of a shareholder pursuant to article 189, paragraphs
2 and 3;
6. as a result of a forcible execution of a shareholder's obligation to the
company;
7. if the shares have been issued as preferred shares for that purpose;
8. in the case of a buy-back.
(2) (Amended, SG No. 66/2005) In the cases under paragraph 1, Items 3, 4, 6, 7
and 8, the shares must have been paid-in in full.
(3) The company shall discontinue the exercising of the rights on own shares
until their transfer.
(4) (Amended, SG No. 66/2005) The total nominal value of the own shares acquired
pursuant to paragraph 1, except for those acquired under Item 1 , shall not
exceed 10 percent of the capital; The company shall transfer the possessed own
shares exceeding this value within a period of three years.
(5) Should the share acquired in the cases under paragraph 1, Items 2 - 8 not be
alienated within the period referred to in paragraph 4, they shall be cancelled
and article 200, paragraph 2 shall be applied.
(6) (Amended, SG No. 58/2003) Own shares shall not be taken into account when
determining the net value of the company's property according to article 247 a,
paragraph 2.
Article 187b
Buy-Back of Shares (New, SG No. 63/1995, amended, SG No. 114/1999; repealed,
new, SG No. 84/2000)
(1) A joint-stock company may buy back its own shares on the basis of a decision
of the General Meeting of the Shareholders, which determines:
1. the maximum number of shares subject to buy-back;
2. (amended, SG No. 104/2007) the terms and procedure under which the board of
directors or the management board shall effect the buy-back within a specified
period not longer than five years;
3. the minimum and the maximum buy-back price.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) The decision under Paragraph (1) shall be
adopted by a majority of the represented capital, and if the buy-back is not
expressly provided for in the Articles of Association - by a majority of
two-thirds of the represented shares. The decision shall be entered in the
commercial register.
(3) (Supplemented, SG No. 66/2005) The buy-back shall be effected pursuant to
article 247a, paragraphs 1 and 2. The aggregate face value of shares bought back
and of those under Article 187a(4) shall not exceed 10 percent of the capital.
In regard to the shares bought back, which exceed this amount, Article 187d
shall apply.
(4) (New - SG No. 66/2005) The Managing Board or, respectively, the Board of
Directors, shall carry out the buy-back in compliance with the requirements of
paragraphs (1)-(3).
Article 187c
Preferred Shares for Buy-Back
(New, SG No. 84/2000)
(1) The Articles of Association may provide for the issue of shares subject to a
buy-back under terms and procedure stipulated in it.
(2) (Amended, SG No. 38/2006, effective 1.07.2007 - amended, in relation to
becoming effective, SG No. 80/2006) The company shall present the buy-back
proposal to the commercial register, which shall be made public.
(3) The buy-back may be effected only with sums intended for distribution
according to article 247a, paragraphs 1, 2 and 3.
(4) The company shall form a reserve in the amount of the nominal value of all
the shares bought back pursuant to paragraph 1. This reserve may be distributed
among the shareholders only in case of reduction of the capital by the amount of
the shares bough-back, or may be used for increase of the capital.
Article 187d
Inadmissible Acquisition of Own Shares
(New, SG No. 84/2000)
If a company has acquired own shares in violation of articles 187a-187c, such
shares shall be transferred within one year of their acquisition. Otherwise, the
shares shall be cancelled and article 200, Item 2 shall be applied.
Article 187e
Disclosure of Information
(New - SG No. 84/2000, amended, SG No. 66/2005, SG No. 105/2006)
The annual activity report of the company shall obligatorily state:
1. the number and the nominal value of own shares acquired or transferred during
the year; the portion of the capital, which they represent, as well as the
price, at which the acquisition or the transfer took place;
2. the grounds for the acquisitions made during the year;
3. the number and the nominal value of the possessed own shares and the portion
of the capital, which they represent.
Article 187f
Cases Equal to Acquisition of Own Shares
(New, SG No. 84/2000)
(1) The provisions of article 187a through 187e shall also apply when:
1. shares of the company are acquired and possessed by one person at the expense
of the company;
2. shares of the company are acquired and possessed by another company, in which
the first company has, directly or indirectly, a majority of the voting rights,
or on which it can, directly or indirectly, exercise control;
3. a company receives as a collateral own shares or shares of a company referred
to in Item 2.
(2) (Amended, SG No. 66/2005) When a company has subscribed own shares at its
incorporation or during an increase of the capital, they must be transferred
immediately. Otherwise the shares shall be invalidated and Article 200, item 2
shall apply. Article 187a(3), Article 187e shall apply to them.
(3) (Supplemented, SG No. 66/2005, amended, SG No. 59/2006) A company shall not
provide loans or secure the acquisition of its shares by a third person. This
restriction shall not apply to transactions concluded by banks and financial
institutions in the course of their usual activity, if as a result of it the net
value of the property continues to meet the requirements of Articles 247a(1) and
(2).
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Section IV
Contributions
Article 188
Obligation to Make a Contribution
(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.
Article 189
Consequences of Delaying Contributions
(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 canceled and destroyed. The
company shall offer for sale new shares substituting the canceled ones. The
contributions made by the expelled shareholder shall be appropriated to the
company's reserve fund.
Article 190
Interest
(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 favor, unless the Articles of Association provide otherwise.
Article 191
Security
The Articles of Association may provide that the shareholders shall provide
security for the portion not contributed.
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Section V
Increase of Capital
Article 192
Prerequisites
(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.
Article 192a
Requirements for Registration of the Increase of Capital
(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.
Article 193
Increase of the Capital Stock by Non-Monetary Contributions
(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.
Article 194
Preferential Right of Shareholders in Emissions of New Shares
(Title amended, SG No. 66/2005)
(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.
Article 195
Conditional Increase of the Capital
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.
Article 196
Increase of the Capital Stock by the Managing Board
(Board of Directors)
(Heading amended, SG No. 84/2000)
(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.
Article 197
Increase of the Capital Stock from Company Funds
(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.
Article 198
Receipt of Shares
(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.
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Section VI
Reduction of Capital
Article 199
Ordinary Reduction
(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.
Article 200
Methods of Reduction
(1) The capital stock may be reduced:
1. by reduction of the nominal value of shares;
2. by cancellation of shares.
Article 201
Reduction of Capital Stock by Cancellation of Shares
(1) Shares may be canceled 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.
Article 202
Protection of Creditors
(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.
Article 203
Simultaneous Reduction and Increase of the Capital
(Title new, SG No. 83/1996, amended, SG 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.
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Section VII
Debentures
Article 204
Procedure for Issuing Debentures
(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.
Article 205
Requirements and Procedure for Offering (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.
Article 206
Holding of Offering
(Title amended, SG 61/2002)
(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 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.
Article 207
Nullity of a Resolution to Issue Debentures
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.
Article 208
First general meeting of debenture-holders
(Title new, SG No. 103/1993)
(Amended, SG No. 61/2002)
The first meeting of debenture-holders shall be deemed legitimate provided one
half of the subscribed loan is represented.
Article 209
Representation of Debenture-Holders
(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.
Article 210
Limitations on Representation
(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.
Article 211
Powers of the Trustee
Trustees may perform acts to protect the debenture-holders' interests pursuant
to resolutions of the general meeting of debenture-holders.
Article 212
Participation of Trustees in the General Meeting of Shareholders
(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.
Article 213
Remuneration of Trustees
(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.
Article 214
General Meeting of Debenture-Holders
(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.
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Section VIII
Conversion of Debentures into Shares
Article 215
Resolution on Conversion of Debentures into Shares
(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.
Article 216
Terms of Validity of Resolution to Issue of New Debentures
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.
Article 217
Conversion upon Increase of Capital Stock
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.
Article 218
Registration of the Altered Capital Stock
(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.
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Section IX
Joint-Stock Company Organs
Article 219
Types of Organs
(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.
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Subsection I
General Meeting of Shareholders
Article 220
Composition of the General Meeting
(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.
Article 221 Competence
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, amended SG No. 67/2008) appoint and
dismiss registered auditors;
7. (renumbered from Item 6, supplemented, SG No. 58/2003, amended, SG No.
67/2008) approve the annual financial statement as audited by the appointed
registered auditor, resolve on profit distribution, replenishment of the Reserve
Fund and payment of dividend;
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.
Article 222
Holding of General Meeting
(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.
Article 223
Convening the General Meeting
(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.
Article 223a
Including Items in the Agenda (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.
Article 224
Right to Information
(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 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.
Article 225
List of Participants
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.
Article 226
Proxy
A shareholder shall have the right to attend a general meeting by proxy executed
in writing.
Article 227
Quorum of Shareholders
(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.
Article 228
Voting
(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.
Article 229
Conflict of Interest
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.
Article 230
Majority
(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.
Article 230a
Minority (New, SG No. 84/2000; Repealed, SG No. 58/2003)
Article 231
Resolutions
(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.
Article 232
Minutes
(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.
Article 232a
Resolutions of a Single Owner (New, SG No. 84/2000)
A written record shall be drawn up of the resolutions of the single owner of the
stock.
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Subsection II
General Provisions for the Two Systems of Administration
Article 233
Terms of Office
(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 reelected 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.
Article 234
Directors
(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 comptrolling 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.
Article 235
Representative Powers
(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.
Article 235a
Contracts of the Single Owner (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.
Article 236
Special Rules on Transacting Deals (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.
Article 237
Rights and obligations (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).
Article 238
Quorum and Majority
(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.
Article 239
Minutes (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.
Article 240
Liability
(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
Article 240a
Liability upon the Request of Shareholders (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.
Article 240b
Contracts with Board Members and Parties Related to Them (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.
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Subsection III
Two Tier System
Article 241
Managing Board
(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.
Article 242
Supervisory Board
(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.
Article 243
Reporting and Supervision
(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.
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Subsection IV
One Tier System
Article 244
Board of Directors
(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.
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Section X
Annual Closing of Accounts and Distribution of Profits
Article 245
Documents (Amended, SG No. 105/2006, SG No. 67/2008)
Annually, not later than the 31st day of March, the board of directors or the
management 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 registered auditors elected by the General Meeting.
Article 246
Reserve Fund
(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.
Article 247
Contents of Annual Report
(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.
Article 247a
Pay-out of Dividends and Interest (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.
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Section XI
Annual Audit
Article 248
Object and Scope of Audit
(1) (Amended, SG No. 67/2008) The annual financial statement shall be audited by
the registered auditors 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.
Article 249
Appointment and Liability of Registered Auditors
(Title amended, SG No. 67/2008)
(1) (Amended, SG No. 50/2008, SG No. 67/2008) Where the General Meeting has
failed by the end of the calendar year to appoint registered auditors, the
registration official of the Registry Agency, acting on a petition by the board
of directors or by the management board or by the supervisory board, as the case
may be, or by an individual shareholder, shall appoint such accountants.
(2) (Amended, SG No. 67/2008) The registered auditors shall assume
responsibility for the bona fide and unbiased performance of audit, and
nondisclosure of secrets.
Article 250
Registered Auditors' Report
(Title amended, SG No. 67/2008)
(Amended, SG No. 105/2006, SG No. 67/2008)
Upon receipt of the report of the registered auditors, the management board
shall submit it to the supervisory board, together with the annual financial
statement and annual activity report. The management board shall also submit the
draft resolution on distribution of profit to be discussed by the General
Meeting.
Article 251
Approval of Annual Closing of Accounts
(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, amended, SG No. 67/2008) The annual financial
statement may not be adopted by the General Meeting without an audit by
registered auditors. The registered auditor shall participate in the meeting 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.
Article 251a
Examination at the Request of Shareholders
(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.
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Section XII
Termination
Article 252
Grounds for Dissolution
(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.
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CHAPTER FIFTEEN
PARTNERSHIP LIMITED BY SHARES
Article 253
Definition
(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".
Article 254
Founders
(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.
Article 255
Contributions
(1) The amount of the partners' contributions shall be specified by the Articles
of Association.
(2) (Repealed, SG No. 103/1993).
Article 256
Partnership Organs
The organs of the partnership limited by shares shall be those set forth by this
Act for a one-tier system joint-stock company.
Article 257
General Meeting
(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.
Article 258
Board of Directors
The board of directors shall consist of the general partners.
Article 259
Adoption and Amendment of the Articles of Association
(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.
Article 260
Liquidation Proceeds
The liquidation proceeds of each partner shall be proportionate to its
contributions in the partnership.
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CHAPTER SIXTEEN
(Amended and supplemented, SG No. 58/2003 - effective 01.01.2004)
TRANSFORMATION OF COMPANIES
Section I
General Provisions
Article 261
Forms of Transformation
(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.
Article 261a
Transforming a Company in Liquidation and in Bankruptcy
(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.
Article 261b
Exchange Ratio (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.
Article 261c
Liability of Members of Managing Bodies (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.
Article 261d
Retaining Third Party Rights
(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.
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Section II
Transformation by Take-Over, Merger, Splitting, Spinning Off
Article 262
Take-Over (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.
Article 262a
Merger (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.
Article 262b
Splitting (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.
Article 262c
Spinning Off (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.
Article 262d
Spinning Off a Sole-Owner Company (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 Article 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.
Article 262e
Transformation Agreement and Transformation Plan (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.
Article 262f
Form of the Transformation Agreement and Plan (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.
Article 262g
Contents of the Transformation Agreement and Plan (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.
Article 262h
Effect of the Transformation Agreement (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.
Article 262i
Report of the Governing Body (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).
Article 262k
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)
(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.
Article 262l
Examination of the Transformation (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.
Article 262m
Examiner's Report (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.
Article 262n
Obligation to Provide Information (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.
Article 262o
Decision to Transform (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.
Article 262p
Majority Requirement in Taking the Decision to Transform (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.
Article 262q
Consent to Transform (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.
Article 262r
Newly Established Company (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.
Article 262s
Amendment to the Membership Agreement or Articles of Incorporation (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.
Article 262t
Increase of Capital (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.
Article 262u
Examination of Capital (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.
Article 262v
Reduction of Capital (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.
Article 262w
Holders of Special Rights (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.
Article 262x
Submission of the Shares (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.
Article 262y
Exchange of Bearer's Shares (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.
Article 263
Filing for the Purposes of Registering a Take-Over or a Merger (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.
Article 263a
Filing for the Purposes of Registering a Splitting or Spinning-Off (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.
Article 263b
Time Limit for Filing for Registration (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.
Article 263c
Registration of a Take-Over or a Merger (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) .
Article 263d
Registration of Splitting and Spinning-Off (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) .
Article 263e
Refusal to Register the Transformation (New, SG No. 58/2003, repealed, No. 38/2006, effective 1.07.2007 -
amended, in relation to becoming effective, SG No. 80/2006) .
Article 263f
Notification of creditors (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.
Article 263g
Date of the Transformation (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.
Article 263h
Closing and Opening Balance Sheets (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.
Article 263i
Transformation Effects (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.
Article 263k
Protection of Creditors in a Take-Over or Merger (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.
Article 263l
Protection of Creditors in Splitting and Spinning-Off (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.
Article 263m
Unlimited Liability in the Case of Transformation (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.
Article 263n
Prohibition on Discharging from an Obligation
concerning Contributions (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 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.
Article 263o
Contending the Transformation (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.
Article 263p
Nullity of a Newly Established Company (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.
Article 263q
Claim for Cash Settlement (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 take over 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.
Article 263r
Right to Leave (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.
Article 263s
Special rules (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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Section III
Transformation by Change of the Legal Form
Article 264
Change of the Legal Form (Amended, SG No. 58/2003)
(1) A company (transforming company) may transform by change of the legal form,
thus converting into a company of another type (newly established company). The
newly established company shall become the legal successor of the transforming
company, which shall be terminated without liquidation.
(2) Simultaneously with the change of the legal form, no new partners or
shareholders may be accepted.
Article 264a
Transformation Plan (New, SG No. 58/2003)
(1) In case of a change of the legal form, the governing body or the partners
with management rights in a personal company shall draw up a transformation plan
in writing with notarization of the signatures.
(2) The transformation plan must include at least 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, the trade name, the standard
identification code and the registered address of the newly established company;
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 are provided for according to Article
261b, paragraph 2, and a time limit for paying them in;
4. a description of the interest stakes, the shares or membership which each
partner or shareholder acquires in the newly established company, and data
concerning any existing pledges and attachments
5. the conditions concerning the distribution and hand-over of the shares in the
newly established company;
6. the rights which shareholders with special rights and holders of securities
which are not shares obtain.
(3) The transformation plan shall enclose also a draft for a new membership
agreement or articles of incorporation of the newly established company.
Article 264b
Provision of Information
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