THE TRADE ENTERPRISE LAW

Part one

INTRODUCTORY PROVISIONS

Head one

TRADESMAN,INDIVIDUAL TRADESMAN,TRADE ENTERPRISE

Division one

Tradesman according to activity

Art.1

A tradesman according to this Law is every legal entity or a physical person independently performing any of the following activities :

1. purchase and sale of movables regardless of the fact whether they are sold unchanged, processed or or reprocessed;

2. trade with securities;

3. purchase of movables for their processing or reprocessing for other persons,provided that the work exceeds the scope of a " smaller craft";

4. banking activities;

5. insurance;

6. transportation of persons and goods;

7. commission work,forwarding,storing and leasing;

8. trade agency and mediation;

9. catering-tourist activity,information activity,marketing or performing other trade services;

10. production of motion pictures ,video tapes,audovisual recordings,software as well as other similar activities;

11. publishing and printing activities and other connected with trade with books and art works ;

12. purchase,construction and arranging of immovables for sale.

Tradesman according to the nature and scope of activity

Art.2

1. A tradesman according to this Law is also every person conducting a business deal which according to the nature and the scope of activity has to be organized and conducted in a way in which trade activities are conducted although not mentioned in Art.1 of this Law,provided that the company has been entered in the trade register.

2. The provisions of this Article are applicable also in the field of agriculture and forestry only in respect to the business deals for processing or reprocessing of the own agricultural and forest products.

3. Persons dealing with free occupations ( advocates,public notaries,doctors,patent engineers ,architects,artists ,accountants etc.) are considered tradesmen according to this Law if the regulations according to which they are performed stupilate for so.

Tradesman according to description

Art. 3

Should the company be entered in the trade register,it may not be claimed that the business deal conducted under the name of that company is not trade one.

Persons not considered tradesmen

Art.4

According to this Law,the following persons are not considered tradesmen :

1. physical persons dealing with agriculture ( farmers)

2. craftsmen and persons rendering services or having free occupations,except for occupations which could be treated as business deal according to Art.2 point 1 of this Law ,and

3. persons rendering catering services by renting rooms in their own homes.

Application of provisions for the tradesman on persons performing trade activity

Art. 5

The provisions of this Law about the obligations of the tradesman are applicable also to persons performing trade activities regardless of the fact that they are not allowed to perform them ,according to the regulations for such activity,or do not comply with the conditions for performing of such activity.

Small -scale tradesman

Art. 6

1. The provisions of this Law about the company,business books and the management do not refer to persons not considered tradesmen according to this Law ,and are dealing with a small scope of trade activity.

2. Trade activities considered small - scale activities and the manner of conducting of thier business books are stipulated for by a regulation adopted by the ministry competent for economic matters in compliance with the ministry competent for finance matters ,in accordance to the scope of the business deal in the corresponding activity.

3. For carrying of a small-scale trade activity a public company or a limited partnership company can not be established.

Provisions for the small-scale tradesman are not applied to the companies

Art. 7

The provisions of this Law regulating the work of the small-scale tradesman are not applicable to the relations of the joint-stock company,the limited liability company and the limited partnership joint-stock company.

Division two

INDIVIDUAL TRADESMAN

Individual tradesman

Art. 8

1. The individual tradesman shall be the person performing any of the activities from Art.1 of this Law as an occupation.

2. Any business-capable person with permanent place of residence in the Republic of Macedonia may be registered as an individual tradesman.

Limitations

Art. 9

The following persons can not be registered as individual tradesmen:

1. the one over which liquidation procedure has been applied;

2. the one that has deliberately gone bankruptcy and the creditors can not settle their outstandings.

Entry into the the trade register

Art.10

1. The individual tradesman is entered into the trade register on the basis of an application containing :

• the name and surname,place of residence,address and main number;
• the trade name under which the activity shall be carried out;
• the seat and address where the activity shall be carried out;
• subject of work.

2. The application shall be accompanied by a form for the authorized signatory and a statement that the tradesman is not deprived of the right to performing any of the activities set forth in Art.1 of this Law.

3. A person may register only one trade name as an individual tradesman.

Trade name of the individual tradesman

Art.11

1. The trade name of the individual tradesman shall contain his personal name,his father’s name and the surname.

2. The trade name of the individual tradesman must contain the designation "TE".

Transfer of a trade name

Art.12

1. The trade name of the individual tradesman may be transferred to a third party together with its business deal.

2. The transfer of the trade name from point 1 of this article may be done by the individual tradesman upon his claimants consent.

3. The individual tradesman’s successors undertaking the business deal may keep the trade name of the individual tradesman.

4. In cases from point 1 and 3 of this Article ,the name of the new owner is attached to the trade name.

5. The transfer of the trade name is entered into the trade register and is published in the "Official Gazette of the Republic of Macedonia".

Joint and several liability with the former owner

Art.13

1. The person continuing the work under the former firm,with or without an addition pointing out the change of owner ,has a joint and several liability for the obligations with the former owner unless otherwise stipulated for with the creditors.

2. The outstandings are settled by the creditors from the former owner first.

Termination of the work of the individual tradesman

Art.15

1. The individual tradesman shall report the termination of the work

to the competent organ for public incomes.

2. The individual tradesman latest three months prior to reporting of the termination to the organ from point 1 of this Article in a proper manner ( in the daily press,business premises etc) shall announce the termination of work and shall cite the date of termination of work.

3. The provision from point 2 of this Article is applied also when the individual tradesman intends to sell the enterprise or to invest in a company.

Division three

The concept of a trade enterprise

1. The trade enterprise (hereinafter referred to as : the enterprise) is association of two or more physical persons and legal entities investing money,objects and rights into property which they make use of in the joint work and jointly share the profit or losses of the work.

2. Persons investing in the main capital assets are founders of the enterprise (hereinafter referred to as Founders) i.e. shareholders of the enterprise (hereinafter referred to as Shareholders).

3. The rights and liablities the founder aquires according to the deposit in the main capital assets are his share in the enterprise (hereinafter referred to as Share).

Forms of Trade Enterprises

Art.18

1. According to the form,regardless of the activity ,the enterprise may be :

• a public company;
• a limited partnership company
• a limited liability company;
• a joint-stock company
• a limited partnership joint-stock company

2. The enterprise may be founded only in form and manner prescribed by this Law.

3. For performing banking activities,trade with securities and insurance,only joint-stock companies may be founded.

4. As an exception in point 3 of this Article, for performing of banking activities through a savings-bank and exchange office and for activities of mutual insurance ,also limited liabilitiy companies may be established.

Agreement,i.e.Statute of the Enterprise

Art.19

1. The form ,the duration,trade name,seat,the subject of work,the amount of the main capital assets as well as the organization and management of the enterprise are set forth by the Agreement i.e. the Statute of the enterprise.

2. The Agreement is concluded in written form as well as the changes in it and its annexes.

3. The contents of the Agreement. i.e. the Statute of the enterprise is stipulated by the founders in compliance with the Law.

4. In order to the to make the preparations for founding of an enterprise ,the founders may agree on the activities that are to be carried out. Should the parties fail to fulfill the obligations undertaken by the Agreement,they are liable only for the damage caused .

Duration of the Enterprise

Art.20

Should the Agreement i.e. the Statute of the enterprise not stipulate the duration of the enterprise,it is considered to be established for an indefinite period of time.

The Enterprise as a Legal Entity

Art.21

1. The enterprise as a legal entity may aquire rights and undertake obligations , aquire ownership over other actual rights, sign contracts and other legal dealings, bring charges and be defendant.

2. The enterprise shall gain the status of a legal entity from the date of its entry into the trade register.

3. The founder,i.e. the person acting in the name of the enterprise prior to its gaining of the status of a legal entity,shall have a joint and several liability for the undertaken obligations with the other founders in case when the enterprise which is correctly constituted and entered into the trade register,does not accept the undertaken obligations. Should the enterprise accept the undertaken obligations,it is considered to have undertaken them from the day when they had arisen.

4. In case when during acting of the founder in the name of the enterprise in the founding procedure,the founders have aquired any rights, they are obliged to transfer them to the enterprise after the entry into the trade register,provided that the enterprise approves.

Kinds of liability for the obligations

Art.22

1. For its obligations,the enterprise shall be liable with all is property.

2. The founders of the public company and the complementary partners in the limited partnership company shall have a personal,joint and several unlimited liability for the obligations of the company with all their property.

3. The founders in the limited liability company ,the shareholders in the joint-stock company as well the dormant partners in the limited partnership company are not liable for the obligations of the company,unless stipulated for in this law.

Special liabilities of the founders

Art.23

1. The founders of the enterprise are liable for the obligations of the enterprise also in the following cases:

- if thay had abused the enterprise as a legal entity for achieving aims which for them as individuals are forbidden;

- if they had abused the legal entity in order to do damage to their creditors;

- if contrary to the law they had disposed of the property of the legal entity as if with thier own property ;

- if in their favour or in favour of any other person they had reduced the property of the enterprise ,and had been aware or had to be aware that the company is not able to fullfil all its obligations toward third parties.

2. Point 1 of this Article is appropriately applicable to the liability of the secret founder.

Persons who may establish an enterprise

Art 24

1. An enterprise may be established by domestic and foreign physical persons and legal entities.

2. A foreign person ,in accordance with this Law ,shall be every legal entity having a trade name entered in a trade register abroad or entered in a trade register in his country and every physical person which is a foreign citizen,or a fugitive.

3. A citizen of the Republic of Macedonia bearing also another citizenship shall chose whether he would use the position as a citizen of the Republic of Macedonia or the one of a foreign person.

4. Each person of point 2 of this Article who aquires a share or shares in an enterperise or invests assets in it on an agreement basis ,has the status of a foreign person.

Right to participation in founding of an enterprise or being a founder in many enterprises

Art.25

1. Anyone may participate in founding of an enterprise or be a founder or shareholder in more enterprises unless forbidden by this Law.

2. An enterprise may be founded by at least two founders ,i.e. at least two founders are required for its existance.

3. A physical person may at the same time be a founder of unlimited liability in one enterprise only. A public company and a limited partnership company may not be a founder of unlimited liability in another enterprise of that type.

Conditions under which a foreign person may be a founder of an enterprise .i.e. a shareholder

Art.26

1. A founder,i,e, shareholder may be any foreign physical person or legal entity.

2. A foreign person may found an enterprise or to aquire shares in the manner and under conditions set forth for the citizens of the Republic of Macedonia and for the legal entities entered in the trade register on the territory of the Republic of Macedonia unless otherwise provided by law.

3. Participation of a foreign person in a newly founded and in an existing enterprise is not limited unless otherwise stipulated for by another law.

4. The enterprise with foreign participants has all the rights and liabilities as an enterprise without foreign participants ,except for the cases prescribed by law.

Approval for founding of an enterprise by foreign persons

Art.27

1. For founding of an enterprise which is fully owned by one or more foreign persons.i.e. in which they are in majority,for transformation of the enterprise into an enterprise of that type, or for aquiring majority of foreign persons in the enterprise an approval is required from the ministry competent for the issues on the foreign economic relations.If within 60 days from the day of submitting of the application approval is not received ,it is considered for the approval not to be given.

2. If the foreign participation does not reach the participation set forth in point 1 of this Article,for founding of an enterprise i.e. for aquiring participation in an existing enterprise, an approval is not required.The aquired participation in the newly founded enterprise .i.e. in the existing enterprise is entered in the foreign investments register kept in the ministry competent for foreign economic relations.

Rights of foreign persons

Art.28

1. The rights aquired by virtue of the invested assets in the enterprise ,may not be changed or reduced by a law or other regulation.

2. The share of the profit belonging to a foreign person ,i.e. the amount belonging to a foreign person in case of termination of the enterprise or partial or total abalienation of the share of a foreign person ,may,by order of the foreign person ,be freely ,without permission, transferred abroad in the currency of the investment provided that the company posesses money funds .

3. The discounts and special privileges for investments and operation by foreign persons are prescribed by law.

Statement for founding of the enterprise

Art.29

1. The founders and the first members of the managing bodies ,i.e. supervising bodies shall submit a statement to the registration court citing the activities performed for founding of the enterprise and claiming that the enterprise has been founded in accordance with the law.

2. Should the person listed in point 1 of this Article fail to submit the abovementioned statement,the registration court shall reject entering of the founding into the trade register.

Statament in case of change of enactments of the enterprise

Art.30

1. The provisions from point 29 of this Law are applicable also in case of change of the agreement i.e. the statute of the enterprise.

2. The statement is submitted by the managing bodies members i.e. the supervising bodies members performing this function at the time of change of the agreement i.e. the statute of the enterprise.

Joint and several liability for damage while founding of the enterprise

Art.31

1. The founders of the enterprise as well as the first members of the managing and supervising bodies shall have a joint and several liability for the damage done due to the non - entering of any of the obligatory provisions stipulated by this law in the agreement i.e. in the statute of the enterprise,or due to missing or incorrect carrying out of the procedures prescribed by the law or due to non - enforcement of the other regulations on founding of an enterprise.

2. The point 2 of this Article is applicable also to change of the agreement i.e. the statute of the enterprise with regard to the members of the managing and supervising bodies performing this function at the time the change has taken place.

Impossibility for invoking invalidity of the agreement

or the statute of the enterprise

Art.32

1. After the entry of the enterprise into the trade register noone of the founder may invoke invalidity of the agreement i.e. the statute of the enterprise due to error, fraud or threat taken place at the time of conclusion of the agreement i.e. adoption of the statute of the enterprise.

2. The provision from point 1 of this Article is applicable also to the changes in the agreement i.e. the statuteof the enterprise.

When is an enterprise considered not founded

Art.33

1. The enterprise is considered not founded in case of breach of the law which could not be removed.

2. Each person having legal interest may require for the registration court to declare non founding of the enterprise.

3. The enterprise which is considered not to be founded shall be officialy deleted by the court from the trade register

4. For the undertaken obligations,the founders have a joint , several and unlimited liablity.

Obligations of the founders for investing in an enterprise

Art.34

1. At the time of founding,the founders place the property of the enterprise to the disposal of the enterprise.

2. The property of the enterprise at the time of founding shall consist of money and non-money deposits of the founders. The non-money deposit may consist of objects (movables and immovables) as well as of rights having value of property.

3. A founder of the enterprise entering a non-money deposit is liable toward the enterprise that the value of his deposit at the time of placing to disposal corresponds to the value stated in the agreement of the enterprise ,unless otherwise stipulated for by this Law.

Right to sharing the profit and the losses of the founders

Art.35

1. The founders shall share the profit belonging to them in the enterprise.

2. Unless otherwise agreed upon in the agreement or pescribed by the statute of the enterprise ,each founder shall participate in the sharing of profit and covering of losses proportionate to their share.

Decision making by the founders

Art.36

1. The decisions in the enterprise are reached upon all founders’ consent unless otherwise prescribed by the agreement of the enterprise.

2. All founders in the enterprise have the right to managing of the enterprise ,unless the agreement i.e. the statute of the enterprise entrusts the managing of the enterprise to one or more founders or to third party i.e. parties.

3. Should the agreement i.e. the statute of the enterprise stipulate for the decisions to be reached by majority of votes ,the type of majority shall be determined. Should the type of majority not be determined ,the decisions shall be reached by majority of votes of the total votes representing the deposits ,proportionate to the share of thier deposits in the main capital assets.

Limitation for a founder to perform certain activities

Art.37

A founder must not perform activities on his account that would harm the objectives of the enterprise.

Mutual obligations of the founders for the expenses or

the obligations undertaken

Art.38

1. Should a founder bear expenses which according to the circumstances are considered necessary or should he suffer damage due to activities that have been dangerous,the enterprise shall be obliged to cover the expenses to him.

2. The founder may require advanced payment for the expenses necessary for performing of certain activities.

3. The founder shall without delay deliver to the enterprise all benefits he has received from third parties for conducting of the work of the enterprise and has derived from managing of the enterprise.

4. Unless otherwise prescribed by this Law,the founder has a right to reward for his personal work in the enterprise.

The obligation to act with the attention of an accurate and conscientious tradesman

Art.39

1. Every founder is obliged to act with the attention of an accurate and conscientious tradesman in the course of performing activities for the enterprise .

2. The founder is liable for the damage he has deliberately ,or out of negligence done to the enterprise.

3. The founder of the enterprise authorized for managing who receives compensation for his work is also liable as the representative.

The right of the founder to be informed

Art.40

1. Every founder of the enterprise ,even when does not participate in managing ,has the right to be personally informed about the work of the enterprise ,to have access to the business books and other enactments,as well as to review the financial situation for its personal use.

2. Any provision set forth by the agreement of the enterprise deviating from point 1 of this Article shall be considered null and void.

Legal regime of the property of the enterprise

Art.41

1. The money,object and rights transferred to the enterprise or aquired by the enterprise shall belong to the enterprise.

2. A creditor of a founder of the enterprise may not settle his outstandings from the property of the enterprise .

3. A creditor of the enterprise may not settle his outstandings from the property of a founder i.e. founders of the enterprise ,except for the cases prescribed by this Law.

Settling of disputes by mutual consent or in court

Art.42

1. Disputes between the founders of the enterprise concerning the agreement of the enterprise ,should be settled by the founders by mutual consent.

2. The founders of a public company and the complementary partners in a limited partnership company may settle disputes concerning the company agreement in court at the Economic Chamber of the Republic of Macedonia,if so agreed upon by the parties in the company agreement.

Protection of the rights arising from the founders relations

by the registration court

Art.43

Should the rights arising form the founders relations be violated by the bodies of the enterprise ,every founder may require protection of those rights from the court keeping the trade register (hereinafter referred to :registration court) according to the seat of the enterprise.

Application of the law according to the seat

Art.44

1. This Law is applied to enterprises with seats on the territory of the Republic of Macedonia.

2. Third parties may refer to the seat set forth in the agreement i.e. the statute of the enterprise ,unless otherwise stipulated by this Law.

3. In dealings with third parties,the enterprise may not refer to another seat should its seat be in some other place.

Control over the enactments of the enterprise

Art.45

1. The registration court shall have the agreement for founding of the enterprise controlled,as well as the agreement i.e. the statute of the enterprise and other enactments for the organization and work of the enterprise ,in compliance with the regulations applied to the organization and the work of the enterprise i.e. the provisions of the agreement for founding of the enterprise ,the agreement ,the statute and the other enactments of the enterprise.

2. The control from point 1 of this Article shall not comprise the issues which are decided upon in other court or in an administrative procedure.

3. Unless otherwise prescribed by this Law, the concept of court according to this Law refers to the local competent court according to the seat of the enterprise.

Announcement of data or reports

Art.46

When the law or an enactment of the enterprise prescribes an obligation for announcement of certain data or reports of the enterprise ,the announcement shall be made in the "Official Gazette of the Republic of Macedonia" unless otherwise stipulated for by this Law.

Entities to which the Law is not applied

Art.47

This Law is not applied to founding,organization,work and termination of public enterprises,public institutions and other institutions ,the cooperations,association of citizens and other forms of organizing not performing any of the activities determined by Article 1 of this Law.

Part two

TYPES OF TRADE ENTERPRISES

Head one

PUBLIC TRADE ENTERPRISE

Division one

THE CONCEPT OF A PUBLIC TRADE ENTERPRISE

AND FOUNDING

The concept of a public trade enterprise

Art 48

1. A public trade enterprise ( hereinafter referred to as :public company) shall be an association of two or more legal entities which toward the creditors have a personal unlimited joint and several liability for the obligations of the enterprise with all their property.

2. A public company shall be founded with an agreement of the company concluded by the founders.

Trade name

Art.49

1. The trade name of the public company shall contain the surnames and the names ,i.e. the trade name or the abbreviated trade name of at least one founder of the company and the designation "and others" should the trade name not contain the surnames and the names of all founders.

2. The trade name shall also contain the words "public trade enterprise" or the abbreviation "pte"

Agreement of the company

Art.50

1. The agreement of the company shall be concluded in writing.

2. The signatures of the founders shall be verified by a public notary’s enactment.

3. The agreement of a public company shall contain provisions on:

• the surname and the name ,citizenship and place of residence ,as well as the address of the founders or the trade name and the seat of the founders should they be legal entities;
• the trade name and the seat of the public company;
• the subject of work of the public company;
• the type and amount of the deposit of each founder and its value stimate;
• the manner of personal participation of each founder in the company work
• the manner of distributing the profit and covering of losses;
• the manner of managing and representing the public company ,decision-,making and
• otther issues prescribed by this law.

Special conditions for performing of activities

Art.51

A public company may perform activities related to a certain occupation should among the founders there be a person with the corresponding qualification,unless the law provides for all founders or majority of them to have the prescribed qualification for activitiy related to a certain occupation.

Entry into the trade register

Art.52

The public shall be entered into the trade register.The obligation concerning the application of the founding of a public company for entry into the register with the competent court shall burden all the founders of the public company authorized for representation.After the entry into the register,the founders must start performing the activities and employ workers.

Contents of the application for registration

Art.53

1. The application for entry of the public company into the trade register shall contain :

• the trade name and the seat of the company;
• subject of work of the company;
• personal name ,occupation and place of residence of each founder,citizenship,and the trade name and the seat for a legal entity;
• manner of managing and representation of the public company ,as well as decision making.

2. The application shall be accompanied by the agreement of the company.

3. The founders ,i.e. the persons who according to the law are authorized for representation shall deposit their signatures with the court.

4. Each change of facts form point 1 of this article ,as well as joining of a new founder shall be entered into the trade register.

Division two

LEGAL RELATIONS BETWEEN THE FOUNDERS OF THE

PUBLIC COMPANY

General provision

Art.54

1. To the legal relation between the founders of the public company the provisions of this division shall be applied,unless otherwise provided by the company agreement.

2. Unless otherwise provided by this law, company the regulations dealing with obligation relations shall be applied to the public company.

Deposits in the company

Art.55

1. The founders do not have to enter equal deposits into the public company .

2. The founder may enter money,objects ,rights ,labour and services into the public company.

3. The value of the non-money deposit shall be determined in monetary value upon the founders’ agreement.

4. The provisions of the company agreement regulating the interest or reward for the deposits shall be considered null and void.

Consequences form delay

Art.56

1. The founder who has failed to enter the money deposit on time or has failed to pay the money received for the public company in the cashier’s office on time or has pilfered money of the public company for himeself,shall be obliged to pay interest to the public company form the day that he had had to enter the deposit or to deliver the money or had pilfered it. A claim for compensation of damages is possible.

2. Should in cases of point 1 of this article be other objects and not money,the public company may demand compensation of damages.

Increase,supplementing and withdrawal of the deposit

Art.57

1. A founder of a public company shall not be obliged to increase his deposit above the amount prescribed by the company agreement,nor in case of a loss is he obliged to supplement it,should he not be responsible for the loss.

2. Withdrawal of the deposit may be requested by a founder only in case of cease of the founders relations in the public company.

Compensation of expenses and damages

Art.58

1. Should a founder of a public company make expenses according to the circumstances considered to be justified or should directly form the operation of the public company or due to that operation damages be inevitably done, the public company shall be obliged to cover the expenses and the damages to him.For the expenses and the damage done the public company shall pay interest counting form the day the expenses i.e. the damage had been done.

2. The founder may ask for advanced payment for the expenses necessary for performance of operations for the company.

Prohibiting of competition

Art.59

1. A founder of a public company must not ,without the other founders’ explicit consent ,undertake deals within the frame of the activities of the public company ,nor be a founder with personal liability,be a member of an organ or be employed in an enterprise being a competitor or could be a competitor to the public company.

2. Working form point 1 of this article shall be considered allowed if at the time the founder joined the public company the founders had been aware of that ,and had not been agreed for the founder to leave the work or to resign.

Consequences of prohibited competiiton

Art.60

1. Should the founder violate the prohibition form article 59 point 1 of this law,the public company may demand compensation of damages form him. The company may,insted of compensation of damages,demand for the founder to admit the deals concluded for his own account as deals concluded for the public company,i.e. deliver to the company what he had acquired form the deals concluded for other entity’s account or to transfer to it his right to what he’s supposed to acquire.

2. On carrying out the rights of the company form point 1 of this article,other founders shall decide. The companies’ claims shall expire in three months counting form the day the founders had acknowledged the violation of the rule form point 59 point 1 of this law. The claims shall expire in five years form the day the violation has been made regardless of the fact when the founders had acknowledged the violation.

3. Carrying out the rights form point 1 and 2 of this article shall not exclude the right of the other founders to demand termination of the company.

Transfer of a share

Art.61

1. A share in a public company may be transferred to third parties upon all founders’ approval.

2. The transfer of a share shall be made with a written deed.

3. The transfer of a share shall take effect for the public company once the transfer deed has been submitted to the public company and confirmed in writing by one of the persons authorized for managing of the public company.

4. The transfer of a share may be pointed out in fornt of third parties up to the date of its entry into the trade register.

Managing of a public company

Art.62

1. Every founder shall be authorized to manage the public company.

2. Should the founders agree for the managing of the public company to be entrusted to one or more founders,the rest of the founders shall be excluded form managing of the public company.

Realization of the entrusted managing

Art.63

1. The managers shall be authorized to act independently in the course of managing of the public company.Should a manager oppose an action before it has been carried out ,its performing shall be prevented until the founders reach a decision on it.

2. Should according to the company agreement all or some of the founders act jointly,then they shall reach thier decisions upon all managers’ approval.Each of the founders may carry out the urgent measures independently provided that damages to the public company are prevented by that. For the measures undertaken the manager shall immediately inform the other managers of the public company.

Transfer of the right to managing

Art.64

1. The founders may transfer the atuhorization for managing of a public company to a third party ,upon other founders’ consent ,in the manner prescribed by the company agreement.

2. The authorization for managing may not be transferred by the founder to a third party should the company agreement provide for so.

3. For the work of the manager form points 1 and 2 of this article ,the founder having transferred the managing shall be liable.

Scope of authorizations for managing

Art.65

1. An authorization for managing shall be made for issues form the framework of the usual operation of the public company.

2. For issues out form the framework of the usual operation of the public company,it shall be necessary for the decision to be reached by all founders no matter whether the company agreement had entrusted the managing to one or more founders or other persons.

3. Decisions exceeding the recognized authorizations of the managers shall be unanimously reached by the founders,unless otherwise provided by the company agreement. Should the company agreement stipulate for the decisions to be reached by majority of votes ,then each founder of the public company shall bear one vote ,unless otherwise provided by the company agreement.

4. The company agreement may stipulate for the decisions form point 3 of this article to be reached by written consultation should none of the founders require for the founders to be convened as assembly of founders. In case of a written consultation,the results shall be stated form the minutes signed by the managers. The minutes shall be accompanied by the answers to the questions placed by each of the founders.

Resigning form entrusted managing

Art.66

1. The founder may resign form the entrusted managing of the public company should there be an important reason for that.As an important reason shall be considered when he is prevented by the other founders form performing the entrusted managing or when he is prevented form it because of health condition.

2. The founder may resign form the entrusted managing of the company only upon a notice of resignation submitted to the other founders which would enable them undertake the necessary measures for managing,unless there is a reason giving him the right to resign prior to the expiry of the period of notice.

3. The period of notice form point 2 shall be 2 months at minimum.

Recall of the managers

Art.67

1. Should all founders be managers or if one or more managers have been appointed among the founders or appointed by the company agreement,the recalling shall be carried out upon an unanimous decision of the founders. The recalled founder may resign form the public company with a request for the rights arising form the founders relations in the public company to be paid to him.

2. Should one or more founders be founders and and have not been appointed by the company agreement,each fo them may be recalled under the conditions set forth in the company agreement or,should it not be the case,upon an unanimous decision of all the founders.

3. The manager not being a founder may be recalled under the condiitons set forth in the company agreement or,should it not be the case,upon a founders’ decision reached by majority of votes.

4. Should the recall be carried out for no grounded reason,it may serve as a basis for demanding compensation of damages.

The right to information

Art.68

1. The founders not being managers shall have the right to receiving a report on the state of the business books and enactments of the public company and to place written questions about the managing of the public company , which shall be answered in writing.

2. By application of the provisions form point 1 of this article the founders of the public company not being managers shall have the right to get familiar with the business books and the enactments themselves,in the seat of the company ,also with the contracts,correspondence ,minutes and all other documents created or received in the public company.

3. The right form point 2 of this article shall include the right to obtaining copies of the enactments and other documents.

4. In the course of exercising of the right form points 1,2 and 3 of this article the founder may use the help of an expert chosen by him form the list set forth by the registration court.

Decision-making

Art.69

1. The decision in the company shall be reached upon the consent of all founders which the managing has been entrusted to.

2. Should the company agreement provide for the decisions to be reached by majority of votes,in case of doubt the majority shall be calculated according to the number of founders.

The right to a reward

Art.70

The founder has the right to a reward for his personal participation in the work of the public company provided by the company agreement.

Participation in a profit and in losses

Art.71

The profit and the losses shall be distributed among the founders of the public company in proportion to the share of each founder in the company,unless otherwise provided by the company agreement.

Division three

THE RELATIONS OF THE PUBLIC COMPANY

WITH THIRD PARTIES

Agency

Art.72

1. Each founder shall be entitled to act as agents of the public company.

2. The founders may, by the company agreement ,authorize one or more founders for agency of the company. Should it be the case,the other founders shall be excluded form agency.

3. Should more founders be authorized to act as agents of the public company,each of the agents may represent the public company independently . The company agreement may also stipulate collective agency.

4. The agency of the public company depending on the fact whether their authorizations allow independent or collective agency shall sign documents for the company independently or collectively.

Resigning and depriving form agency

Art.73

1. The agent may resign form the agency authorization,within a period of at least three months form the date of its written information to the rest of the founders.Excluding or limiting of this right is null and void.

2. The registration court may,to the other founders’complaint and for important reasons,deprive the founder form the agency authorization. Each violation of an obligation of the founderor his incapability to act as an agent of the company.

3. The cease of the agency authorization toward third parties shall take effect on the day it has been entered into the trade register.

Personal liability of the founders

Art.74

1. For the obligations of the public company each founder shall be directly liable to the creditors of the public company with all his property and jointly with all other founders.

2. A provision of the company agreement opposed to point 1 of this article toward third parties shall be null and void.

3. The creditors of the public company may demand payment of the debt of the public company form the founders after they had unsuccessfully reminded the public company in a non-trial procedure and put in in delay

4. A founder joining an already existing public company shall also be liable for the obligations of the public company that had been made prior to his joining the public company.

Expiry of the outstandings

Art.75

1. Outstandings claimed to the founder for the obligations of the public company shall expire in five years after the public company has been terminated,i.e. after the founder has left form the public company ,unless the outstandings claimed to the public company expire in a shorter term ,according to this law.

2. The expiry shall count form the date the termination of the public company or leaving of the founder has been entered into the trade register. Should the public company cease to exist due to application of a liquidation procedure,the expiry shall count form the date the application of a liquidation procedure has been entered into the trade register.

3. Should the outstandings be claimed after the entry into the trade register according point 2 of this article,the expiry shall count form the date the outstandings had been claimed.

4. The provisions of points 1 and 2 of this article shall not be applied to expiry of an outstanding arisen form relations between the founders or between the founders and the public company.

Cease of expiry of otstandings

Art.76

1. The cease of expiry of outstandings toward the terminated company shall be effective toward the founders belonging to the company at the time of the cease.

2. The cease of expiry of oustandings toward the public company not terminated yet shall not be effective to the founder that had left,and the cease of expiry effective to a particular founder shall not be valid for the other founders.

Division four

TERMINATION OF THE PUBLIC COMPANY

AND TERMINATION OF THE FOUNDERS RELATIONS

Reasons for termination

Art.78

1. The public company shall be terminated on the following cases:

• once the term it has been established for expires;
• upon a founders’ decision;
• upon application of a bankruptcy procedure to the public company;
• in case of death of any of the founders,i.e. upon cease of a founder-legal entity,unless otherwise stipulated for by the company agreement;
• upon application of a liquidation procedure over any of the founders;
• resignation of any of the founders of the public company
• upon a valid court decision and
• in other cases prescribed by law and by the company agreement.

Resignation of a founder

Art.78

1. Should the company be established for an indefinite period of time,the founder may cancell the company agreement upon a period of notice of six months,counting form the end of the business year. The resignation must be submitted to each of the founders.The period of notice may be extended by the company agreement. Other excusiosn and limitations shall be considered null and void.

2. The provisions form point 1 of this article shall be applied also to the public company which according to the company agreement is valid for the lifetime of each of the founders or has been silently extended for the period after the validity term.

Termination upon court’s decision

Art.79

1. For significant reasons the court may, at the complaint of a founder of the public company ,decide on termination of the company prior to the expiry of the validity term,i.e. without a resignation,should the validity term not be determined.

2. As significant reason form point 1 of this article shall be the case when a founder violates an important obligation deliberately or out of negligence,should the fulfillment of such obligation or achieving of the aim become impossible or should the aim be achieved.

3. The provision of the company agreement excluding or limiting the founders’ right to demanding termination of the public company according to points 1 and 2 of this article shall be null and void.

4. A complaint shall be submitted against other founders.

5. At a request of a founder,the court may,instead of deciding on termination of the company, expel the gulity founder.

Resignation for serious violation or inappropriate behaviour

Art.80

Each founder may resign form the founders relation in the public company without a period of notice should any of the founders of the public company seriously violate the company agreement or his behaviour endanger the further cooperation with him or achieving of the aim of the public company.

Protection of a founder’s creditor

Art.81

1. A founder’s creditor,which within six months fails to settle its outstandings within the procedure of forced effectuating of the movvable property of the founder,may demand seizure of the liquidation part of the founder-debtor and upon written information to all other founders within the following six months ,demand termination of the public company ,unless otherwise stipulated for by the company agreement.

2. The public company shall not cease to exist should the company or other founders settle the debt after the seizure order form point 1 of this article has been made.

3. Should the company or the other founders in the public company settle the debt ,the participation of the founder shall cease,unless otherwise decided upon by the founders.

Prolongation of validity of a company after cease of a founder

Art.82

1. The company agreement may stipulate for the public company to continue to exist after the founders relation of any of the founders ceases. In that case the other founders shall pay for the rights of the share of the founder which has left the public company,and in case of death of a founder in the public company,the successors shall acquire the status of founders should they wish so.The successors shall make the statement of acquiring the status of a founder in the public company within three months form the day they had been pronounced successors.

2. Should the successors refuse to become founders,as well as in case of termination of the founders relations,the public company shall pay for the rights of the successor’s share or of the share for which the founders relation has ceased.

Undertaking of a company without a liquidation

Art.83

1. If the public company consists of only two founders,and in one of them reasons for termination of the founders relations appear,the court may authorize the second founder ,at his requiest,to undertake the public company without liquidation,with the assets and liabilities.

2. Should a bankruptcy procedure be applied to a founder,the other founder shall be entitled to undertake the public company without liquidation,with the assets and liabilities.

Entry of the termination into the trade register

Art.84

1. The founders shall aplly for entry of the termination into the trade register,unless the public company ceases due to application of bankruptcy procedures.

2. All founders shall apply for entry into the trade register also when the founders relation of a founder of the public company ceases.

Head two

LIMITED PARTNERSHIP COMPANY

Division one

GENERAL PROVISIONS

The concept of a limited partnership company

Art.85

1. A limited partnership company shall be a company in which two or more entities enter into partnership ,where one of the founders has a joint several and unlimited liability for the obligations of the company with its entire property (hereinafter : complementary partner) while at least one founder is liable for the obligations of the company up to the amount of the its assets entered into the company (hereinafter : dormant partner).

2. The dormant partners shall participate with at least one-fifth in the total amount of deposits.

Application of the provisions for the public company

Art.86

Unless otherwise provided by the provisions of this head,the provisions regulating the public company shall be applied to the limited partnership company.

Division two

FOUNDING AND ENTRY INTO THE TRADE REGISTER

Company agreement

Art.87

The limited partnership company shall be founded upon a company agreement. The company agreement shall be concluded in writing .The signatures shall be verified by a public notary.

Contents of the agreement

Art.88

The company agreement shall contain provisions on :

• limited partnership company trade name and seat ;
• subject of work of the limited partnership company;
• name and the place of residence ,i.e. the trade name and the seat,citizenship,as well as the founders’ address;
• total amount of the founders’ deposits;
• type and ratio of the deposits of each of the founders;
• manner and term of payment of deposits;
• distribution of profit and covering of losses;
• managing and agency of the limited partnership company ,decision-making;
• other provisions regulating the relations between the founders.

Trade name

Art.89

1. The trade name of the limited partnership company shall contain the surname and name ,i.e. the trade name or the abbreviated trade name of at least one of the complementary partners,and the designation "and others" should there be more of them, as well as the words "limited partnership company" or the abbreviation "lpc".

2.The surname and the name of the dormant partner shall not be entered into the trade name.

3. The dormant partner shall be liable as a complementary partner should his surname and name be included into the limited partnership company trade name.

Entry into the trade register

Art.90

1. The application for entry of the limited partnership company into the trade register shall be submitted by the complementary partners.

2. The publishing of the entry of the limited partnership company into the trade register by the court,except for the prescribed deta,may comprise only the appointing of the number of complementary partners and the total amount of thier deposits.The name of the dormant partners may not be published without their approval.

3. The provisions form point 2 of this article shall be applied when the dormant partner joins an exisiting company,i.e. leaves the limited partnership company,also when the type of deposit is changed or the amount up to which the dortmant partner is liable.

Division three

LEGAL RELATIONS BETWEEN THE FOUNDERS

Rights and liabilities between the founders

Art.91

1. The rights and the liabilities shall be regulated by the company agreement.

2. Should the company agreement regulate particular issues,the provisions of this law for the public company shall be applied,unless otherwise stipulated for by this division.

The obligation of personal participation

Art.92

1. Only the complementary partner shall be obliged to personal participation in the company work.

2. The company agreement may provide for the dormant partner to be obliged to personal participation.

3. A reward for personal participation in the work of the limited partnership company shall belong also to the dormant partner form point 2 of this article.

Managing

Art.93

1. The complementary partners shall manage the limited partnership company.The dormant partners shall not have the right to managing the company.

2. A dormant partner may not oppose the decisions not the acts of the complementary partners,except for decisions and acts reached or undertaken out of the framework of the regular operation of the limited partnership company.

Application of the provisions on compensation of expenses

and damages, and prohibition of competition

of the complementary partner

Art.94

The provisions form articles 58 and 59 of this law shall be applied to the complementary partner,unless otherwise provided by the company agreement.

The right to information

Art.95

The dormant partner has the right to be informed about the contents of the business books of the limited partnership company and the documents,as well as to place questions in writing concerning the managing the limited partnership company ,which are to be answered in writing.

Transfer of deposits

Art.96

1. The deposits in the limited partnership company may be transferred to a third party upon all founders’ consent.

2. The company agreement may stipulate for;

• the dormant partners’ deposits to be freely transferred among the founders;
• the dormant partners’ deposits to the renounced to third parties upon the approval of all complementary partners and the majority of dormant partners,in accordance with their number and the amount of thier deposit and
• the complementary partner to renounce part of its desposit to a complementary partner or to a third party upon the approval of all complementary partners and majority of dormant partners,according to thier number and the amount of their deposit.

Change of seat

Art.97

1. The founders may change the seat of the limited partnership company upon an unanimous decision.

2. Other changes and ammendments to the company agreement shall be carried out upon the consent of all complementary partners and majority of dormant partners,according to the number and amount of their deposit.

Participation in distribution of profit

and covering of losses of a dormant partner

Art.98

1. The dormant partner shall participate in distribution of the profit of the limited partnership company in proportion to its deposit.

2. The dormant partner shall participate in covering of losses of the limited partnership company up to theamount of his deposit. The dormant partner shall not be obliged to pay back the received profit due to later loss of the limited partnership company.

Prevention of distribution of profit

Should the limited partnership company suffer constant losses in the course of its work which affect the paid deposit,up to establishing of the prescribed amount profit shall not be distributed.

Division four

LEGAL RELATIONS OF A LIMITED PARTNERSHIP

COMPANY WITH THIRD PARTIES

Agency

Art.100

1. A dormant partner may not act as an agent of a limited partnership company. Unless otherwise stipulated by the company agreement,such provision shall be null and void.

2. A dormant partner may not act as an agent of the limited partnership company even with an authorization.

3. Should a dormant partner act in opposition of points 1 and 2 of this article,it shall have a joint and several liability for the obligations of the limited partnership company arisen form the forbidden activities. The scope of responsibility shall be determined according to the number and the effect of the forbidden activities.

Liability of the dormant partner

Art.101

1. The dormant partner shall not be liable for the obligations of the limited partnership company should he pay the entire deposit he has undertaken by the company agreement.Should the dormant partner fail to pay the entire deposit he has undertaken by the company agreement,he shall have joint several and direct liability with the other founders up to the amount of the agreed deposit reduced by the paid share.

2. Should the dormant partner according to the agreement with the other founders of the limited partnership company reduce the amount of his deposit,up to the entry of the new deposit into the trade register he shall be liable toward thisrd parties up to the initial amount of the deposit.

3. A party acquiring the status of a dormant partner,shall be liable also for the obligations of the company it has undertaken prior to his joining the company.

Division five

TERMINATION OF A LIMITED PARTNERSHIP COMPANY

Conditions for termination of the company

Art.102

A limited partnership company shall be terminated should:

• all complementary partners leave it;
• bankruptcy procedure be applied to a complementary partner;
• a complementary partner lose its working ability;
• a dead complementary partner that had been the only complementary partner with all successors being juvenile ones can not be substituted by a new complementary partner nor the limited partnership company can be transformed into a limited liability company;
• upon a court’s decision;
• in other cases provided by law and the company agreement.

Death or cease of a dormant partner

Art.103

1. A limited partnership company does not cease to exist upon death of a dormant partner i.e.upon cease of a dormant partner not being a physical person.

2. Should due to leaving the limited partnership company by all dormant partners only the complementary partners remain,the limited partnership company shall proceed with its work as a public company.

3. The change form point 2 of this article shall be registered into the trade register within 30 days form the leave of the last dormant partner.

4. Should the limited partnership company fail to obey the term form point 3 of this article ,the company shall cease to exist.

Successor of a complementary partner

and transformation of the company

Art.104

1. Should the company agreement stipulate for the limited partnership company operation even in case of death of one of the complementary partners to continue its operation throuhg its successor being a juvenile one,he shall have the status of a dormant partner up to majority.

2. In case the dead complementary partner had been the only complementary partner and all its successors are juvenile ones ,the dead complementary partner may be substituted by a new complementary partner and the limited partnership company may be transformed into a limited liability company form the day of death of the complementary partner.

Bankruptcy procedure over a complementary partner

Art.105

1. Should a bankruptcy procedure be applied to a complementary partner or should he lose his business capability,the limited partnership company shall cease to exist.

2. As an exception form point 2 of this article the limited partnership company shall continue its operation with the complementary partners to which a bankruptcy procedure has not been applied i.e. which have not lost the business capability ,should the continuation be provided by the company agreement or upon an unanimous decision of the founders.

LIMITED LIABILITY COMPANY

Part one

FOUNDING

Art.106

1. A limited liability company shall be the company where each founder shall participate with a certain deposit (basic deposit) in the predetermined basic capital assets.
2. The basic deposits do not have to be equal.
3. For the obligatiions of the limited liability company ,the founders shall not be liable.

Number of founders in the Company

Art.107

1. A limited liability company may be founded by one person considered as a single founder.

2. The Company may have maximum 50 founders.

Obligations of the founders toward the Company

Art.108

The founders shall be obliged toward the Company by fulfilling other obligations stipulated by the Company Agreement.

Trade name of the Company

Art.109

1. The trade name of the Company shall contain a designation on the activity of the Company ,the names of all or some of the founders or the name of one founder ,after which the words " limited liability company " shall follow ,or the abbreviation "ltd".

2. If the Company is established by one person ,the trade name shall contain the words " sole founder limited liability company" or the abbreviation "sfltd".

Company Agreement

Art.111

1. The limited liability company is established with a Company Agreement concluded by all the founders in written form.

2. If the company is founded by one person,the Company Agreement is replaced for a statement of the founder of the limited liability company verified by a notary public.

3. The founders conclude the Agreement from point 1 of this article personally or through an authorized person having an authorization verified by a notary. An authorization is not required if the representative of the founder is athorized by law to conclude the Company Agreement for the founder or to make a statement required for founding of the Company.

4. Successive founding of a limited liability company is not allowed.

Contents of the Agreement ,i.e.of the statement

Art.111

1. The Agreement,i.e.the statement shall stipulate the following in particular:

• the names,the place of residence,citizenship as well as the address of the founders,i.e.trade name and seat if the founder is a legal entity;
• line of business of the Company;
• the duration of the Company;
• the amount of the capital assets and the amount of each founder’s basic deposit ,if the basic deposit consists in objects and rights ,they shall be described in details and their value shall be determined.
• method and term of payment of the money deposits entered in full;
• methods and criteria for distributing of the profit and covering of losses;
• managing of the Company
• rights and liabilities of the founders beside the obligation of payment of a basic deposit
• agency and representation of the Company.

2. Beside the issues listed in point 1 of this Article,the Company Agreement may regulate other issues and relations.

3. If the Company Agreement contains provisions contrary to this law,they are null and void.

Basic Capital Assets of the Company

1. Should the basic assets amount be reduced for any reason below the amount determined in Art.112 of this Law, it shall have to be raised up to the amount provided by this Law within one year ,unless the limited liability company has been transformed into a company of another type.

1. Should the basic capital assets not be raised up to the determined amount in point 1 of this Article within the stipulated term ,each person having legal interest may require termination of the limited liability company after he has warned his representatives to coordinate such situation with the law.If the situation stops from the day the court has reached a first-degree decision ,the procedure is stopped.

Amount of the basic deposits of the founders

Art.114

1. The amount of the founders’ basic deposits may not be equal,but the amount of each separate basic deposit may not be less than 200,00 DEM in countervalue.The basic deposit is expressed in denars in a way provided in Art.112 point 3 of this Law and has to be expressed with a whole number divisible by 100.

1. Each founder while establishing of the Company has a right to one basic deposit. One basic deposit may be owned by more persons.

Payment of the basic deposit with legal payment facilities

Art.115

The basic deposit which is not paid with legal payment facilities is allowed only if stipulated by the Company Agreement.

Basic deposits in objects

Art.116

1. Should the basic deposit consist of objects that are undertaken by the limited liability company,the Company Agreement shall specify the founder entering the objects ,as well as the objects to be undertaken,the value at which the Company undertakes them and privileges given to the founder entering the objects if the founders agree upon.

2. There shall be a report on the value of the objects made by an official appraiser which shall be attched to the Company Agreement.The appraiser shall be appointed by the future founders from the list of appraisers determined by the court.

3. The appraiser is entitled to a recompensation for the service and covering of the expenses.

Determining of the value of the basic deposits in objects

Art.117

1. Should the value of a deposit in objects and rights be below 50.000,00 DEM in denar countervalue and if the total value of the whole - objects and rights does not exceed the half of the basic capital amount,the future founders may unanimously decide not to appraise the value of the deposit in objects and rights. In that case the founders prior to submitting documents for registration make a report on the deposits in objects stating that the value of the deposit in objects or rights is not less than the amount of the undertaken basic deposit.

2 If the value of the deposit in objects ,i.e. rights is not determined by an official appraiser or if in the Agreement the expressed value is not equal to the value determined by the appraiser ,the founders have joint and several liability to third parties within five years from the day of registration of the founding of the Company in the trade register,for the value of the deposit in objects and rights determined at the moment of establishing of the limited liability company.

Registration of the basic deposits

Art.118

1. Inviting founders by a public invitation and entering basic deposits in personal labour and rendering of services is contrary to this Law.

2...The basic deposits are registered as a whole.

Payment and entering of the basic deposits

Art.119

1. Each founder at the time of founding of the Company shall pay one third of the deposits he pays in money,so that the total value of all payments in money and the value of the entered objects and rights should not be below 5.000,00 DEM in denar countervalue.

2... The deposits in objects and rights shall be entered in full prior to submittting the documents for registration of foundation of the limited liability company in the trade register. If the value of the deposits in objects does not reach the value of the undertaken basic deposit , the founder shall make an extra payment of the balance in money.

3. Payment fo the basic deposit shall be made on a temporary account of

the limited liability company at an istitution for payment operations.

4. The payments from point 1 of this Article as well as the full entering of the deposit in objects and rights shall be of the nature allowing the limited liability company a free and lasting disposal from the moment of their registration in the trade register.

Compensation and privileges for objects and rights the founder transferres to the Company

Art.120

If a founder of the Company is given compensation for the objects and rights he transferres to the Company and that value is added to his basic deposit or if any founder is given special privileges in the Company,in the Company Agreement such founder is cited ,as well as description of the objects and rights ,their value expressed in monetary value and the privileges that the founder aquires .

Settling of expenses for founding of the Company

Art.121

1. The founders provide assets for settling of the expenses for founding of the Company commensurate with the amount of their basic deposits.

2. The founders may decide for the expenses for founding of the limited liability company to be reimbursed to them or, reward for participation in founding of the Company to be paid to one or more founders.

3. The expenses and the rewards from point 2 of this Article may be paid from the profit only.The founders may decide for the payments for thar purpose to be made before payment of the dividend to the founders.

Conditions under which the basic deposits may be

reimbursed to the founders

Art. 122

1. If the limited liablity company is not established within 6 months counting from the day of payment of the first basic deposit in a way set forth in the Company Agreement,a founder may require for the court to determine his right to reimbursement of his deposit.

2. If founders decide upon founding of the limited liability company after the decision of point 1 of this Article,a new procedure for entering of deposits is carried out.

Limitations for founding of a limited liability company by a

physical person

Art.123

1. A physical person may not be a sole founder in more than one limited liability company.A single founder company may not be a sole founder in another limited liability company.

2. In case of nonobservance of the provisions of point 1 of this Article,a person having legal interest may require termination of the limited liability company from the registering court . If the nonregularity arises from uniting into one person of all shares in a company with more founders, the demand for termination may be submitted only after expiry of one year from the day of undertaking of all shares by one person.

3. The court may determine a six month term for reconciliation of the situation according to the Law and will not make a decision on termination of the limited liability company if the situation has been reconciled on the day of deciding.

Liability of the first managing bodies

Art. 124

1. The first managing bodies of the limited liability company and the founders proven responsible for the annulment of the activities undertaken in the founding procedure have joint and several liability to third parties and the other founders for the damage caused by the annulment.

2. The claim is submitted within three years from the day when the decision on termination went into effect.

Application for registration of founding of a Company

Art.125

The application for registration of founding of a Company in the trade register is signed by the manager,i.e. all managers of the Company.

Enclosures to the Application for Registration

Art.126

1. To the application for registration of the limited liability company,the following documents shall be enclosed:

• the Company Agreement;
• the enactment for appointing of a manager or managers of the Company;
• a proof that each founder has paid at least one third of the basic deposit in money;
• a proof that at least one half of the basic capital assets has been paid.

2. If at the time of founding of the limited liability company the whole amount of the money deposit has not been paid,the rest of the amount shall be paid in a way set forth in the Company Agreement. The rest of the amount should be paid within one year.

3. The Company Agreement must not set forth provisions contrary to point 2 of this Article.

4. The court may reject the application for registration if the official appraiser of the value of the deposit in objects and rights establishes the fact ,or it is obvious ,that the report of the founders from point 1 of Article 117 of this Law is irregular or opposite to the law or if the appraiser states or the court establishes the fact that the value of the deposit in objects is lower at least for one third of the amount of the entered basic deposit.

Liability of the founders and managers for damage

Art.127

1. The founders and the managers have joint and several liability to the limited liabilitiy company for damage caused due to premediation or negligence, or non-entering or irregular entering of deposits in objects ,due to unreal evaluation of those deposits or any other disadvantegeous effects in the founding procedure.

2. If covering of the damage is necessary for fulfilling of the obligation towards third parties,the limited liability company can not cancell the claim for paying damages from point 1 of this Article nor can bargain in respect to that claim.

3. Expiration of the claim from point 1 of this Article starts from the day of entry of the limited liability company into the trade register.

4. The claim for paying damages from point 1 of this Article expires in 5 years from the day of entry of the llimited liability company into the trade register.

5. For the damage of point 1 of this Article ,the person for whose account the founder has undertaken the deposits is also liable.

6. The person from point 1 of this Article may not refer to the founder not being familiar with the circumstances he has been familiar with or had to be familiar with ,acting in his name or has acted with attention of a neat and coscientious businessman.

• death of the physical person - founder;
• resigning of the founder from the Company
• expelling of the founder from the Company and
• start of a liquidation procedure over the founder.

2. The property rights of the founder are regulated by the balance of accounts at the end of the month in which the founder relation has been terminated.

Resigning and expelling of a founder

Art.157.

1. The Company Agreement may stipulate for the founder to have the right to resign or to be expelled from the limited liability company,as well as to determine the conditions ,the methods and the consequences of the resigning or expelling of the founder from the Company.

2. The founder may bring charges to the competent court requiring resignation from the Company if there is grounds for it. As grounds the following is considered : if he suffers damage from the other founders or a company body ,if he is prevented from exercising his rights in the Company or he is burdened with extreme tasks .Within 30 days from the announcement of the decision the founder may ask for protection with the competent court.

3. The founder may ask for protection with the competent court for another founder to be expelled from the Company, if there is grounds for it.The following cases may be considered grounds: if the other founder causes damage to the Company or to any of the founders ,if he acts opposite to the decisions of the assembly of the Company , if he does not participate in managing of the Company thus preventing and limiting the regular operation of the Company or the execution of the rights of the other founders or violates the provisions of the Company Agreement.

4. The founder may not quit beforehand the rights from points 2 and 3 of this Article .

Effects of resignation or expelling of a founder

Art.158

1. Once a founder resigns or is expelled from the Company,his founder relation is terminated.

• review and adopt the annual balance of accounts and the annual report and decides on distribution of the profit and covering of losses,unless otherwise stipulated by the Company Agreement;
• appoint to office and remove from it the manager i.e.the managers,determine their reward and exercise the right of an employer toward them;
• decide on the appointing to office and removal from it of the members of the supervisory board,unless the Company Agreement stipulates for this organ to be formed or if it is formed according to this Law;
• decide on reimbursement of the supplementary payments;
• decide on supervision over the Company and appoint the supervisors;
• raise the requests for compensation of damage done in connection with the founding of the Company and managing toward the manager ,i.e. the managers ,the members of the supervisory board or the supervisors and decide on appointing of a representative for conducting of disputes if the Company cannot ne represented by the manager i.e. the managers or the members of the supervisory board;
• approve conclusion of contracts for purchase of equipment for its needs and immovables amounting more than one fifth of the basic capital assets;
• approve contracts which are concluded by the Company with its founder ,manager or their close relatives ,except if such conclusion of contracts is within the regular activities of the Comany ,and
• perform other activities set forth by this Law.

2. The Company Agreement may stipulate for the assembly of the founders to decide on other issues ,too.The aasembly may unanimously decide on each matter of importance for the work of the company.

• perform trade activities on their behalf which are comprised in the line of business of the company ;
• be founders of unlimited liability in another company having the same or similar line of business as the Company;
• be high officials in another company performing the same or similar activities as the Company.

2. Should the manager act in opposition to the limitations from point 1 of this Article , the company may :

• demand compensation of damages;
• demand for the manager to renounce the deal concluded for his account;
• demand for the manager i.e. the managers to repay the profit aquired from the deal concluded for other account or to transfer the claim arisen from that deal to the company;

3. The demands of the company from point 2 of this Article expire in 3 months from the day the manager i.e. the managers had acknowledged the fact. After the expiration of three years from the day of breaching of the limitations the demand can not be effectuated..

4. In case of breaching of the limitations from point 1 of this Article the manager i.e. the managers who are not founders,may be dismissed without prior notice and without right to compensation of damage.

Keeping of business books and preparing of the annual

balance of accounts

Art.179

1. The manager,i.e. the managers shall take care of an orderly and in accordance to the law and other regulations,keeping of the business books of the limited liability company.

2. The manager i.e. the managers shall prepare the report on the managing of the company as well as the annual balances of accounts which after the expiration of the business year are submitted to the assembly of the founders.

3. The documents from point 2 of this Article ,as well as the proposal for decisions to be reached proposed by the manager i.e. the managers ,and if necessary , the report of the revision ,are submitted to the founders in a manner and in terms set forth in the company agreement.

4. In connection with the documents from point 3 of this Article the founders may pose questions in written form to which the manager i.e. the managers of the company are obliged to reply at the assembly of the founders.

5. Decisions opposed to points 3 and 4 of this Article may be declared null and void.

Informing of the founders

Art. 180

1. The manager,i.e. the managers shall at the request of the founders ,submit a report on the work of the limited liablity company and provide access in the business books ,enactments and other documents of the company.

2. Should the manager,i.e. the managers fail to meet the founder’s request,he may refer to the registering court. The court reaches a decision in a non-trial procedure which comes inot effect immediately.

3. The founder may submit a complaint against the court decision but it does not postpone its execution .

Responsibility of the manager,i.e. the managers

Art.181

1. The manager,i.e. the managers have personal ,joint and several liablity toward third parties for working in opposition to the provisions of the Law and the other regulations, for non fulfillment of the Agreement,as well as for mistakes commited in the course of managing of the company.

2. If more founders participated in the same activity,the court shall determine the contribution of each founder in the damage.

3. Beside the action for damage that the founders suffered themselves,they may submit a personal or group claim for damages against the manager i.e. the managers . They may claim full compensation of the damage the company had suffered.

4. Any provision of the company agreement providing for each claim to be conditioned by the prior opinion or approval of the assembly of the founders is null and void.

5. Any decision of the assembly of the founders may not allow non submitting of a claim on the manager’s responsibility for mistakes commited in his work.

Removal from office of a manager i.e. managers

Art.182

1. A manager i.e. managers may be removed from office by a decision of the founders representing more than a half of the shares in the limited liablity company. Any provision stating the opposite is null and void.

2. If the removal from office is made without guilt being proven ,the manager i.e. the managers are entitled to compensation of damages.

3. At a request of each founder, a manager i.e. managers may be removed from office according to point 1 of this Article by the court in a non-trial procedure

Reduction of the number of managers below the number

stipulated by the agreement

Art.183

1. If the number of managers decreases under the number stipulated for by the company agreement ,the other managers are obliged to convene the assembly of the founders within 30 days.

2. If the company remains without a manager i.e. managers ,the assembly of the founders shall be convened by the court in a non-trial procedure, in order for any person having legal interest to be found

Managing of a sole founder company

Art.184

A sole founder limited liability company is managed by the very founder himself or by a manager i.e. managers appointed by him. If the single founder is a legal entity ,the company is managed by its manager i.e. managers or person i.e. persons appointed by him.

Art.185

1. The company agreement may stipulate for a supervisory board to be established which shall follow the execution of the company agreement, supervise the use of the material assets of the limited liability company and submit reports to the assembly of the founders.

2. Establishing of a supervisory board is obligatory if:

• the company has basic capitall assets exceeding 100.000,00 DEM in denar countervalue or
• the company has more than 20 founders or
• the annual average number of emloyees exceeds 200.

3. If a supervisory board is not established in the company,a supervisor may be appointed.

Appointing of the members of the supervisory board

Art.186

1. The members of the supervisory board i.e. the supervisor ,are appointed by the assembly of the founders.The first supervisory board .i.e. the supervisor ,may be appointed by the company agreement.

2. In a single founder company,the supervisory board i.e. the supervisor is appointed by the very founder.

3. For members of the supervisory board i.e. supervisor the following persons may not be appointed :

• the manager,i.e. the managers and the employees of the company;

the spouses ,relatives of the straight and side line up to third degree of the persons from point 3 provision 1 of this Article.

• persons who by legal actions have been deprived from performing supervising activities.

4. The dismissal of the members of the supervisory board i.e. supervisor is carried out by the assembly of the founders by two-thirds majority of all votes.

Composition of the supervisory board

Art.187

The supervisory board shall consist of at least three members.

Sessions of the supervisory board

Art.188

The supervisory board shall hold sessions at least three times in the course of one business year.

Authorizations of the supervisory board

Art.189

1. The supervisory board shall supervise the work of the limited liability company,thus reviewing and appraising the business books of the company,as well as the enactments ,the material assets and especcialy the treasury and the securities. The performance of these activities may be entrusted to a certain member of the board or to an expert who is not a member of the supervisory board.

2 To the interest of the company,the assembly of the founders must convene the supervisory board.

3. Activities that may be performed without the approval of the supervisory board shall be set torth by the company agreement.

Competence of the supervisory board in respect to the annual balance of accounts and the proposal for distribution of the profit

Art.190

1. The supervisory board shall review the annual balance of accounts ,the proposal for distribution of the profit and the annual report on the managing of the company and shall inform the assembly of the founders about the results.

2. The report shall contain the methods and the scope of supervision of the work of the company in the course of the business year as well as the conclusions it has reached about the annual report and the annual balance of accounts.

Supervision authorizations of the founder

Art.191

1. In a limited liability company where a supervisory board has not been established nor a supervisor appointed, each founder has the right to get familiar with the work of the company ,to personally review the business books,enactments , the stock lists ,the trasury and to draw up the balance.

2. All possible disputes between the founders and the manager i.e. managers with respect to execution of the right from point 1 of this Article shall be settled by the registering court in a non-trial procedure after interrogation of both sides.

3. Each founder may,at any time, point out to the supervisory board i.e. supervisor ,particular matters of his field of activity ,in written form. If this is done by founders representing one tenth of the basic capital assets or the company agreement stipulates a major part of the basic capital assets ,the supervisory board submits a report on those matters with the necessary propositions at the next session of the assembly of the founders.

4. Should the matter be urgent and of of big significance and the manager i.e. the managers at the request of the supervisory board i.e. the supervisory have not convened the assembly of the founders, the supervisory board convenes the assembly of the founders without delay.

The right to giving instructions and choice of experts

Art.192

1. Beside the regular supervision ,the assembly of the founders may,at any time ,give instructions ,chose experts who beside the regular supervision organs shall together with them review the annual balance of accounts and the annual report on the management of the company,the report of the supervisory organs as well as the whole operation or the operations of ceratin departments.

2. Should the assembly of the founders reject the proposal for reviewing from point 1 of this Article ,one or more founders representing at least one-tenth of the basic capital assets may propose to the registering court to order reviewing within 15 days from the day of the session of the assembly . The persons who have submitted such proposal should point out the violation of the Law,the rights of the founders or the company agreement. The founder or founders who have proposed reviewing can not transfer their shares prior to consent of the company untill it is decided upon compensation of the expenses of the control.

Check of claims by the registering court

Art.193

1. One or more claimants of the limited liability company whose claims are not sufficiently provided for and reach the amount of at least a half of the basic capital assets ,may propose to the registering court that it should conduct check.At the proposal,the court may in a non-trial procedure order a check if the claimants prove their claims and the fact that the manner of work of the company obviously jeopardizes the payment of their claims or that in the course of work of the company the law has been violated or unfair activities performed. The court shall ,without a proposal from the company, order placing of an example of a guarantee for the damage that the company could possible suffer as a result of the decision on the check,as well as from the very check ,taking into consideration , in the course of evaluation of the guarantee , the amount of the basic capital assets and the amount of the claims.

Applying of the provisions on banning of competition and

resposnibility of a member of the supervisory board ,i.e. supervisor

Art.194

1. The provisions of the points 178 and 181 of this law are applicable to the members of the supervisory board i.e. the supervisor.

Part four

CHANGE OF THE AGREEMENT OF A

LIMITED LIABILITY COMPANY

Decision on a change of the company agreement

Art.195

1. Change of the company agreement is carried out upon a decision of the assembly of the founders by at least three-fourths majority of the total votes. The company agreement may set forth additional conditions for its change.

2. Chenge of the determined subject of work in the company agreement may be carried out upon a decision of the assembly of the founders reached unanimously ,unless otherwise stipulated by the company agreement.

3. Increase of the stipulated obligations of the founders or decrease of the rights of the founders they are entitled to according to the company agreement is carried out upon all founders’ approval concerned by the increase i.e. decrease.

4. Provisions of the company agreement which are opposed to the provisios from points 1 and 3 of this Article shall be null and void.

Legal force of a decision on a change

of the company agreement.

Art.196

1. A change of the company agreement has no legal force untill it is entered in the trade register.

2. The change of the company agreement is entered in the trade register by the manager i.e. the managers of the company .

First sub-division

Increase of the basic capital assets

Art.197

1. Should the assembly of the founders reach a decision on increasing of the basic capital assets,the increased basic capital assets may be covered by undertaking new basic deposits.

2. The basic capital assets may be increased provided that all previous basic deposits have been paid for in full.

Conditions for increase of the basic capital assets

Art.198

1. The decision on increase of the basic capital assets shal stipulate the amount of the raise,the manner in which persons undertaking the amount shall participate in the distribution of profit and the exact time of the business year in which the basic capital assets have been increased.,as well as the amount of the share of the capital assets that is to be paid prior to the entry in the trade register. Only upon a decision on increasing of the basic capital assets payment may be required from the persons that undertake the amount of the increase ,i.e. payment above the nominal amount of the basic deposit undertaken. The new amounts shall be entitled to special rights.

2. The entry of the decision on increasing of the capital assets into the trade register and its announcement shall be carried out by the manager i.e. all managers of the company,after the amount of the increase has been covered with the undertaken basic deposits and after payments have been made which according to the company agreement i.e. the decision of the assembly of the founders is to be effected prior to the entry into the trade register.

3. Prior to the announcement of the entry of the decision on increase of the capital assets into the trade register,the company must not mention the raise in its business announcements and correspondence.

Undertaking of new basic deposits by the founders

Art.199

1. The company shall offer the new basic deposits to the founders or to other persons who are not founders.

2. The undertaking of new basic deposits by the founders shall be carried out in proportion to the existing basic deposits ,unless otherwise agreed upon or otherwise decided upon by the assembly of the founders.

3. The manager i.e. the managers by registerd letters offer the founders to undertake new basic deposits amounting the raise, that belongs to them in accordance with point 2 of this Article. Should the founder within 15 days from the day of receipt of the letter fail to undertake the basic deposit ,the manager i.e. the managers shall offer the deposit to the other founders in the same manner. If they do not undertake the deposit within 8 days the manager i.e. the managers at their own choice and to the interest of the company,shall offer it to persons who are not founders ,unless otherwise stipulated by the company agreement or the decision of the aasembly of the founders.

4. The statement of undertaking shall be submitted as a notary public enactment. Beside the amount of the undertaken basic deposit the statement shall contain the data about all other obligations arising from the company agreement and the decision on raise of the basic capital assets. If the person undertaking a basic deposit is not a founder,the statement shall contain his consent of becoming a founder and of his willingness to undertake the rights and liabilities stipulated by the company agreement.

Lowest amount,payment and arrival of the basic deposit

Art.200

1. The provisions of this Law about the lowest amount,the manner of payment ,arrival of the basic deposit as well as for the legal consequences from delay in payment,are applicable also to the new basic deposits.

2. If the new basic deposit is not entered as a money deposit,the provisions on evaluation of the deposits in objects and rights as well as the reponsibility of the founder placing the deposit are applicable also to the new basic deposits.

Raise of the capital assets from the company property

Art.201

The assembly of the founders may decide on raising of the capital assets also from the company property exceeding the basic capital assets.The raise of the deposits shall be made in proportion with the previous basic deposits of the founders.

Entering of new founders into a company founded by one person

Art.202

1. If the limited liability company founded by one person as a result of raise of the capital assets admits one or more new founders ,they shall be obliged to adjust the organization and the operation of the company according to the provosions of this Law related to companies of two and more founders.

• after the term stipulated by the company agreement has expired;
• upon a decision of the founders;
• upon a decision for merging with another company,i.e. for division;
• in case of conducting of a bankruptcy procedure ;
• upon a decision of the registering court

in other cases provided for by Law.

2. The company agreement may stipulate other grounds for termintation of the company.

Grounds for termination of a company founded by one person

Art.208

1. The company founded by one person in which the owner of the share is a physical person ,is terminated with the death of the person,unless otherwise stipulated or the successors demand for the company to continue its work.

2. When the owner of a sole founder company is a legal entity,the company is terminated with the termination of the legal entity.

Decision on termination

Art.209

1. The decision on termination of the company is reached by the founders by at least three-fourths majority of total votes.

2. A provision of the company agreement contrary to point 1 of this Article is null and void.

Termination of the company upon a decision

of the registering court

Art.210

1. The registering court may,in a non-trial procedure ,decide for the limited liability company to be terminated in the following cases :

• if it is required by one or more founders who are bearers of at least one-fifth of the basic capital assets ,if there is solid grounds for it;
• if it is required by a competent government bodies and the company proved not to be founded in compliance with the law or its liablity is contrary to the Law.

2. The court shall,except for the cases when the Law stipulates otherwise,prior to deciding on termination , summon the manager i.e. the managers to appear in court , and the supervisory board if established. They are being heared ,but a decision may be reached without hearing if it could have not been done due to the circumestances that the invited person had not appeared in court or had not submitted a written statement within the stipulated term.

Termination of the company on the basis of a court decision

Art.211

1. The court may ,at a complaint of one or more founders, reach a verdict for termination of the company in cases when accomplishing of the aim of the company arising from the subject of work, is impossible, or there are important reasens for termination of the company.

The complaint shall be submitted against the company.

2. The founders who have submitted the complaint have joint and several liability toward the company for the damage that could be caused to it by premediated complaint or out of negligence.

Termination of the company at the request of a creditor

Art.212

1. One or more creditors whose outstandings amount at least one half of the basic capital assets ,may with a complaint submitted to the registering court demand for the company to be terminated should any annual balance sheet or check prove that the reserves or one half of the capital assets had gone; that the operation of the company obviously jeopardizes the payment of their outstandings ;that in the course of operation of the company the Law has been violated and unfair activities performed.

2. The founders have a joint and several liability for the damage that could be caused to the company due to premediated complaint or out of negligence.

Regular liquidation

Art.213

1. In cases of termination of the limited liability company according to provisions 1 ,2 and 5 from point 1 of Article 207 of this Law, a liquidation procedure shall be applied.

Cases in which the company is not terminated

Art.214

1. The limited liability company shall not be terminated if one or more founders go bankrupt or are out of their working age.

2. The company shall not be terminated also in case of death of one of the founders unless otherwise stipulated by the company agreement.

Registration of termination of the company

Art.215

1. The termination of the company as a result of expiration of the term for which it has been founded or by decision of the founders ,shall be entered into the trade register by the manager i.e. the managers.

2. The court shall register termination of a company in all cases ,stating the manner in which the termination has been done. If the company is terminated on the basis of a court decision, the termination shall be registered by official duty .

3. Should the manager i.e. the managers fail to act in compliance with the court invitation and fail to report the termination , the court in its second invitation shall determine the term ;after expiration of the term , the termination of the company shall be registered in the trade register and the court shall appoint liquidators. Prior to the registration of the termination and appointing of liquidators,the managers .i.e. the managers shall be interrogated ,as well as founders who do not have authorization for managing of the company,if possible.

Part six

TRANSFORMATION OF A JOINT-STOCK COMPANY

INTO A LIMITED LIABILITY COMPANY

Transformation of a joint-stock company into a

limited liability company

• the shareholders should be invited in a manner stipulated by the law or the statute of the joint-stock company,to make statement whether they would participate in the limited liability company with the share of the property of the joint-stock company their shares would be entitled to.The invitation is announced three times in intervals not shorter than eight and not longer than 15 days. If the shares are issued to a name or the documents for the shares have not been issued,the shareholders are invited with a registered letter to make a statement immediately. The term for making statement must not be shorter than one month counting from the third announcement i.e. from the day of receipt of the registered letter. If at the assembly all shareholders are represented ,there shall be no invitation. For the shareholders who at the assembly fail to decide whether they shall participate in the limited liability company ,the one month term counts from the day of the session of the assembly.
• the shareholder should participate in the limited liability company with a basic deposit with the share of the joint - stock company which would belong to his shares in case he becomes a founder in the limited liability company.
• the limited liability company should have sufficient number of shareholders so that the nominal amount of their shares to be at least three-fourths of the basic capital assets of the joint-stock company. ,and
• if the capital assets is not covered with participation according to provosion 3 of this point due to the fact that not all shareholders participate or they do not participate with all their shares or due to the fact that the value of the part of the property of the joint-stock company that would belong to certain share does not reach the nominal amount of the shares ,the capital assets may be supplemented by basic deposits collected from persons who are not shareholders ,and who can effect full payment only in cash prior to the entry of thedecision on transformation into the trade register.

2. The value of the property of the joint-stock company as well as the part belonging to certain share is estimated on the basis of the balance drawn up for that purpose , stating the true value of the property. The balance is approved by the assembly of the joint-stock company which may fully reach decisions if at least three-fourths of the capital assetshave benen represented ,provided that the majority should be at least three-fourths of the votes.

Method of transformation

Art. 218

1. The undertaking of the basic deposit shall be carried out by statements verified by a notary public.

2. For the limited liability company established by transformation of a joint-stock company ,an agreement shall be concluded according to the provisions of this Law.

3. Should the agreement from point 2 of this Article be adopted at the assembly of the joint-stock company deciding on the transformation,the agreement shall be verified by a notary public who shall,at the request of persons making statements for undertaking of basic deposits at the very assembly,verify those statements in the very minutes of the assembly provided that the contents are in compliance with the provisions of this Law.

4. Should the value of the property of the joint-stock company in the course of transformation decrease or the capital assets of the limited liability company are less than the basic capital assets of the joint-stock company ,provisions of this Law on invitation of creditors and payment to the shareholders in the procedure of decrease of the basic capital assets,shall be applied.

5. The provisions of this Law for the basic capital assets and basic deposits in the limited liability company shall also be applied in case of transformation of a joint-stock company into a limited liability company.

Entry of the transformation into the trade register

Art.219

1. The application for registration of the transformation in the trade register shall be signed by the member of the managing organ and of the supervisory board of the joint-stock company and the manager i.e. the managers of the limited liability company ,responsible for the decision on transformation of the company.

2. The application shall be accompanied by the following documents ,original or verified copies :

• the minutes of the assembly of the joint-stock company at which the decision has been reached on its transformation into a limited liability company;
• the statements of all members of the managing organ and the supervisory board of the joint-stock company ,and the manager i.e. the managers of the limited liability company ,stating that all conditions for transformation have been fulfilled in accordance with this Law ,and
• the decision on transformation of the joint-stock company into a limited liability company.

3. Once the decision on transformation has been registered ,the joint-stock company becomes a limited liability company.

4. The limited liability company from point 3 of this article shall be entitled to dispose of the property of the former joint-stock company whose legal successor it is.

5. Should the application from point 3 of this article not be submitted within three months from the day the assembly has reached the decision on transformation,the decision shall be considered not to be reached.

Rights of a shareholder after the entry of the

transformation into the trade register

Art.220

1. A shareholder who for its share has not undertaken a basic deposit or has not undertaken it for all his shares may ,after the entry of the transformation into the trade register, demand for the shares for which he has not undertaken basic deposits ,to be paid to him in cash ,according to the value determined by a prepared balance . The limited liability company may determine a term for withdrawal of the cash which may not be shorter than three months. After the expiration of this term,the cash is deposited with the court ,and the shares declared null and void. On the basis of the shares declared null and void ,the amount deposited with court for them may be withdrawn.

2. The provision of point 1 of this article shall be applied also to shares which calculated in the basic deposit,the deposit would not be divisible by 100 ,except if the balance is supplemented with money; also to shareholders who due to insufficient number of shares would not be entitled to participate as founders in the limited liability company unless they join their shares for that purpose or pay additional money up to the lowest approved amount of the basic deposit.

3. The shareholders of the joint-stock company being transformed into a limited liability company may not have other demands from the company property.

1. The joint-stock company shall be a company which,according to the statute, has a determined basic capital assets divided to equal parts (shares), in which the shareholders participate with one or more shares each and where the obligations are provided for with the entire property of the company.

2. The shareholders shall have obligations prescribed by the statute and shall not be liable for the obligations of the joint-stock company.

3. The provisions of this law regulating the joint-stock company may be deviated form only in the manner and under the conditions prescribed by this law.

The trade name of the joint-stock company must express the subject of work of the company,with these words following : "joint-stock company" or the abbreviation "JSC".

The basic capital assets and the shares shall be expressed in denars,and may be also expressed in countervalue in hard currency.

1. The lowest nominal value of the basic capital assets,when the joint-stock company is founded by a public invitation, shall be 50.000,00 DEEM in denar countervalue, and 20.000,00 DEEM in countervalue if it is founded without a public invitation , according to the medium exchange rate of the National Bank of the Republic of Macedonia on the day of submitting of the application for entry of founding of the company into the trade register, i.e. form the day of submitting of the application for entry of the change in the basic capital assets of the company into the trade register, provided that number must be divisible by 100.

2 The lowest nominal value of the basic capital assets form point 1 of this article shall not refer to a joint-stock company founded for performance of banking and insurance activities,as well as activities concerning trading with securities. In these cases the lowest nominal value of the basic capital assets shall be prescribed by a separate law.

3. The minimum nominal value of the share shall not be lower than 10 DEEM in denar countervalue according to the medium exchange rate of that currency announced by the National Bank of the Republic of Macedonia on the day of submitting the application for entry of founding of the company into the trade register, i.e. on the day of submitting the application for entry of the change of the basic capital assets of the company into the trade register. A share with a nominal value lower than 10 DEEM in denar countervalue shall be null and void.

4. The nominal values of the shares over the nominal value form point 3 of this article must be expressed with a whole number divisible by ten ,and the shares with nominal value over hundred must be divisible by hundred.

5. For the damage done by emission of shares opposite to the provision form points 3 and 4 of this article ,the persons responsible for such issuing shall have joint and several liability toward the bearers of the shares

1. The shares shall have the status of securities in business transactions.

2. The certificate of share shall be issued for each share or for more shares of the same type (collective share).

3. The shares toward the joint-stock company shall be indivisible.

1. The shares may not be issued under their nominal value.For the damage arising form issuing shares under their nominal value the founders shall have joint and several liability.

2. The shares may be issued under their nominal value.

3. Should the shares , according to the provisions of the statute, be issued over the their nominal value, the surplus value must be paid before the entry of the company into the trade register.

1. The assembly of the joint-stock company may,by changing the statute,denominate the value of the shares, i.e. express it also in hard currency,reduce or increase their nominal value,provided that the amount of the basic capital assets remains unchanged.

1. The shares may be issued to a name or to a bearer.

2. The shares must be issued to a name should they be issued before the full payment of the nominal value (temporary share) or should the value be higher than their nominal value.The amount of the partial payment shall be indicated on the share. The temporary shares issued to a bearer shall be null and void.

3. The shares form points 1 and 2 of this article may be issued simultaneously in proportion determined by the statute of the company,providing that the shares issued to a name must be at minimum 90% form the total number of shares of the company.

4. The statute of the company may stipulate a possibility for the shares issued to a name to be transformed into shares issued to a bearer and vice versa,at the shareholders’ request and in accordance with point 3 of this article.

1. The joint-stock company may issue shares with different rights.The shares bearing the same rights shall constitute one type of shares.

2. According to the rights,the shares may be regular( plain shares)and priority ones (privileged shares).

3. For the issuance of shares to which special right are related (priority shares) the company may demand separate supplementary money payments once,at the time of the issuance of the shares.

1. The regular shares shall be the shares giving their holders:

the right to vote in the assembly of the company

the right to participation in the share of the profit (dividend) and

the right to payment of part of the remaining liquidation i.e. bankruptcy mass.

2. The priority rights shall enable the holders of the priority shares to appoint or to propose certain number of members of the organs of the company,provided that half of them shall be of property nature,giving them additional benefit in respect of the profit or the property of the company.

3. The rights form point 2 of this article may be joined.

1. The priority shares may be cumulative and participle ones.

2. The cumulative priority share shall give its holder the right to receive payment of the accumulated unpaid dividends before receiving payment for any dividends to the owner of the deposit of regular shares,in accordance with the decision on issuance of shares.

3. The participle priority share ,beside the prescribed dividend,shall give the right to payment of dividend belonging to the holders of regular shares,in accordance with the decision on issuance of shares.

1. Each share shall give the right to vote in the assembly of the joint-stock company.

2. The priority shares, according to the provisions of this law, may be issued as shares without the right to vote.

3. Rights to more than one vote shall not be allowed.

4. The Ministry competent for the economic affairs,in accordance with the Government of the Republic of Macedonia, may approve issuing of shares with more than one vote should that be necessary mainly for keeping of the economic interests or when the law provides that the subject of work is of public interest.

5. Issuance of shares giving different right to vote in the assembly of the company for equal nominal value shall be forbidden.

1. The statute of the company may stipulate for issuance of shares to the employees free of charge or at reduced price.

2. The shares form point 1 of this article may be issued only form the company property that exceeds the basic capital assets ,by simultaneous increasing the basic capital ,amounting at maximum ten per cent of the increased basic capital assets.

3. The shares form point 1 of this article shall be issued to a name and may be transferred among the employees and the pensioners that had been employed in the company,obeying the rules for shares issued to a name.

4. In case of death or termination of the employment of an employee,except for the case of retirement,the right to priority in purchasing shares shall belong to the company. The company shall purchase the shares at their market value but at the nominal value at minimum.

5. The employees’ shares shall give the same rights as other shares.The conditions for acquiring and transfer of these shares shall be determined by the managing organ,which may provide for a certain group of employees to acquire the said shares jointly.

Decision on issuance of shares

1. A decision on issuance of shares shall be reached by the founder,i.e. the assembly of the company.

2. The decision on issuance of shares shall regulate the following in particular :

• the trade name of the issuer of the shares;
• the type of shares;
• the type of shares according to the rights they give;
• the total amount the shares shall be issued on;
• the nominal value of the shares;
• the designation pointing out whether the shares are issued to a bearer or to a name;
• the number of votes the share gives;
• the manner of payment of dividend;
• the time and manner of subscribing shares;
• the number of shares;
• the manner and the term for payment for the subscribed shares;
• the term and the interest rate for back payment of the paid assets in case of cancellation of the issuance of shares;
• the right to priority in purchasing shares and the order of priority when priority shares are issued in several series;
• the manner of announcement of issuance of shares;
• the procedure of distribution and delivery of shares;
• manner of disposing of the shares;
• the rights that the holder of a priority share acquires;
• bearing of risks and
• other issues related to issuance of shares.

3. Under conditions prescribed by another law, the statute of the company may provide for the company to issue the shares also in non-materialized form, beside the very document.

1. The decision on issuance of shares may stipulate for issuance of a receipt for shares to the effect that full payment of the deposit had been made thus giving the holder the right to possession of the number of shares indicated in the receipt.

2. The decision on issuance of shares may stipulate for issuance of a receipt for the part of the deposit paid by the shareholder (temporary receipt).The temporary receipt shall be issued to a name.

3. The receipt for shares and the temporary receipt may serve only as an identity card for participation in the work of the assembly of the company,i.e. of the founding assembly of the company with a certain number of votes,in a manner and under the conditions set forth by this law.

1. The share shall consist of three parts.

2. The first part shall be the wrapping of the share containing the following elements:

• the designation of it being a share;
• the designation of the type of the share;
• the trade name and the seat of the issuer of the share;
• the surname and the name ,i.e. the trade name of the shareholder,should it be issued to a name;
• the total sum the shares have been issued to and number of shares;
• the terms of payment of the dividends;
• the place,date if issuance,the serial number with a control number of the share ;
• the facsimile of the signatures of the authorized persons of the issuer of the shares;
• rights arising form the share.

3. The second part shall consist of a coupon sheet with the coupons to be used for the payment of the dividend.The coupon for the payment of the dividend shall contain the following elements:

the serial number of the coupon for the payment of the dividend;

the number of the share the dividend is being paid for;

the trade name of the issuer of the share;

the year in which the dividend is being paid and

the facsimile of the signatures of the authorized persons of the issuer of the share.

4. The third part of the share shall be a stub to be used for receiving a new coupon sheet for payment of dividend.

For signing of the shares and the temporary shares a facsimile shall be allowed.The validity of the signature may be conditioned by obeying of a certain shape.A provision on the shape of signatures may be contained in the foundation deed of the company,i.e.in the statute.

1. The joint-stock company may,up to the amount of half of the basiv\c capital assets,issue bonds which at the request of the bearer of bonds may be transformed into shares (convertible bonds).

2. The joint-stock company may issue bonds which in case of increase of the basic capital assets provide the right to priority purchase of new shares issued by the company later (bonds providing the right to priority purchase).

3. The bonds providing the right to priority purchase and the convertible bonds shall be set forth by the statute of the company.

1. The joint-stock company may be founded by at least three physical persons and legal entities.

2. As an exception form the conditions set forth by this law,the joint-stock company may be founded by one person.

3. A joint-stock company may not be founded by legal entities to which bankruptcy procedure has been applied.

1. Founders of a joint-stock company shall be the legal entities i.e. the physical persons that had signed the founding deed of the company.

2. The signatures placed by the founders on the foundation deed of the joint-stock company shall be verified by a public notary.

1. The foundation deed of the joint-stock company shall contain provisions on :

• the trade name and seat;
• the subject of work;
• the sum of the basic capital assets
• the nominal value of the shares and the number of shares according to the types and the types according to the rights they give,should issuance of different types of shares be stipulated for;
• the privileges the founders shall be entitled to;
• non-money deposits that are to be effected by the founders and other persons;
• the right of the founders to appointing the first members of the managing i.e. supervision organs , should it be stipulated for so and
• other issues of importance for the founding of the company.

2. The privileges form point 1 of this article may not consist in premiums,interests and previous withholds form the profit of the company.

3 At the time of founding,the issues form point of this article may be set forth simultaneously with the statute of the company.

1. each separate profit of a share holder shall be stipulated for by the foundation deed under the name of the person entitled to it.

2. The whole sum of expenses which for the account of the company shall be guaranteed to the founders or to other persons as compensation or reward for foundation or for participation in the preparatory activities for foundation of the company shall be set forth by the foundation deed..

3. The contracts and other legal actions producing profits and rewards in opposition to points 1 and 2 of this article shall be null and void to the company.After the entry of the company into the trade register,the invalidity can not be cancelled by changing the foundation deed.

1. Should the future shareholders make non-money investments or should the joint-stock company undertake existing equipment or equipment that have to be produced ,the foundation deed shall set forth the object of investment ,i.e. undertaking,the person that the company acquires the objecti.e.undertakes the equipment form, and the nominal value of the shares provided for the investment in the object.

2. Should the foundation deed or the investment contracts concluded in accordance with it and the legal actions for their performance have been adopted i.e. concluded in opposition to point 1 of this article,they shall produce no legal effect for the company.Should the company be entered into the trade register,the invalidity shall not affect the validity of the foundation deed.Should the enactment for investment in objects be null and void,the shareholder shall be obliged to pay for the nominal value and the higher value for issuance of the share.

3. Once the joint-stock company has been entered into the trade register,the invalidity can not be cancelled by changing the foundation deed.

1. The basic capital assets shall be registered on the whole.

2. The money deposits shall be paid for up to the moment of the entry of the company into the trade register,amounting at minimum one-third of their nominal value.The payment of the rest shall be effected in one or more installments in accordance with a decision of the managing organ within a term that shall not be longer than three years,counting form the say of the entry of the company into the trade register.

3. The non-money deposits shall be entered on the whole into the company up to the day of the entry into the trade register.

4. The deposit may not be presented by personal labour or rendering of services.

1. The undertake of money deposits may not be carried out by an agent of the company prior to the entry into the trade register.

2. Should the company not be founded within six months counting form the day of the entry of the founding deed with the registration court,each investor may demand for the court to appoint an agent in a extrajudicial procedure authorized for back payment of the of the investors’ deposits.

3. Should one or several founders decide to prolong the founding of the company,a new procedure for payment of the money deposits shall be carried out.

1. Should the law or the statute prescribe an obligation for publishing of data or records of the company,they shall be published in the "Official Gazette of the Republic of Macedonia".

2. In the daily press,determined by the statute of the company, also other data and reports which the managing organ considers to be of importance for the shareholders may be published .

1. A joint-stock company may be founded also in the following way: the founders themselves or jointly with other persons,personally or through an agent,in one or several statements undertake all the shares without a public invitation and make a statement that they are founding a company.

2. The founders shall undertake the shares by making a statement about undertaking the obligation for payment of the shares.

3. Each enactment of undertaking shares form point 1 of this article shall contain the following data : the person undertaking the shares,the number ,type of the shares and their nominal value as well as the time and the manner the payment is to be carried out.

4. Should all the shares be undertaken by the founders only or should a founder of the joint-stock company be one person,the statement of undertaking shares may be contained in the draft statute of the company signed by them.

1. The statute shall set forth the evaluation of non-money deposits.Attached to it shall be a report of an appraiser chosen by the founders form the list of appraisers determined by the court.

2. The appraiser may require the necessary explanations and evidence form the founders.

3. The appraiser shall be entitled to a money reward for the expenses and his work.

1. The founders shall prepare a written report on the course of founding of the joint-stock company (founding report).

2. The founding report shall contain the basic conditions the payment of the deposits in objects i.e. rights shall depend on. It shall list:

• the legal actions with which the company had acquired deposits in objects i.e. in rights;
• the purchase or production expenses for the objects for the past two years;
• the income for the past two years should an enterprise be invested in the company,according to the financial report;
• the number of shares undertaken by ,and for the account of a member of the managing organ i.e. the supervisory board and
• the type and manner according to which a member of the managing organ i,e, of a supervisory board had acquired special privileges ,indemnity or reward for participation in the founding.

The statute of the company shall be prepared by the founders and signed by all shareholders personally,or through representatives entitled to it with a special authorization,after the the receipts of the money deposits had been issued and the appraiser’s report form article 248 form this law has been placed at the disposal of the shareholders.

1. The statute of the joint-stock company shall contain provisions on the following:

• the trade name and the seat of the company;
• the subject of work of the company;
• the value of the basic capital assets,the nominal value of the shares,the number of each nominal value ,the type of shares in case of issuance of several types of shares,as well as the number of shares issued of the corresponding type ;
• the number of members of the managing and the supervisory organ should such organ be established according to the statute;
• the form and the manner of publishings of importance for the company,i.e. for the shareholders;
• the personal name and place of residence ,the citizenship i.e. the trade name and the seat of each founder;
• the duration of the company and
• the manner of termination of the company.

2. Beside the provisions form point 1 of this article the statute may contain other provisions of importance for the company ,unless forbidden by this law.

3. The other issues of importance for the company that are not regulated by the statute,may be regulated in conformity with this law and other enactments of the company.

1. The first members of the managing organ and of the supervisory board (if one is provided to be established) shall be nominated in the statute.

2. Should according to the statute of the company the assembly of the company nominate members of a managing organ i.e. of a supervisory board,for that purpose the founders shall convene a separate assembly of the share undertakers.

3. To the assembly form point 1 of this article the provisions of this law concerning the founding meeting of the company shall be applied.

1. The share undertaking must be unconditional and unlimited. After the entry of the company into the trade register ,the undertaker may not point out to the company and to its creditors that he had not been familiar with the undertaking enactment,the statute and the report of the founders or that he had not approved of them.

2. The provisions form point 1 of this article shall be applied also to the person for the account of which the signatory of the enactment has undertaken the shares.

The joint-stock company shall be considered to be founded once the founding deed has been signed with which the share undertaking has been completed . When the first organ of the company is established at a separate assembly and should the total sum of expenses for the founding be determined at that assembly,the company shall be founded by establishing its organs and by determining and approval of the expenses.

Should any of the payments arriving before the entry of the joint-stock company into the trade register not be made on time,the founders may themselves undertake the shares that have not been paid for or find another person that shall undertake them.The payments made by the former undertaker shall belong to the company.

1. The joint-stock company may be founded also by subscribing to all or to a certain number of shares on the basis of an announcement.

2. Should all shares not be subscribed on the basis of the announcement ,undertaking of the rest of the shares shall be carried out by corresponding application of the provisions of this law regulating the share undertaking when the company is being founded simultaneously.

1. The announcement inviting to subscribing to shares (the prospectus) shall be prepared in accordance with the founding deed (decision on founding,decision on issuance of shares,share issuing plan or proposal).

2. The prospectus shall contain provisions on :

• the enactment on the basis of which the prospectus is being issued;
• the number,type and kind of shares offered for subsription,their nominal value,their issuing value,as well as the number,type and kind of shares undertaken without subscribing to on the basis of the prospectus;
• the place and the financial institution with which the shares are being subscribed to and a warning that the founding deed and the draft statute may be reviewed there ,and depending on the case, the founders’ and the appraiser’s report, too;
• the calendar day of the opening and the closing of the subscription ;
• how much,where and when the subscribed shares should be paid for prior to the entry of the company into the trade register,as well as the consequences occurring in case the installments are not paid exactly and on time;
• the manner in which the shares are distributed in case of excess subscription;
• the day when the obligation of the subscriber ceases,should the company fail to be entered into the trade register by that day;
• the exact data for the non-money deposits ,the purchases at the time of founding,the benefits, payments and awards;
• certain periodical obligations of the shareholders;
• the manner of convening the founding assembly;
• the highest amount of the expenses for the founding,should they be borne by the company and
• the family and the born names (the trade names and the title),the occupation,the place of residence (the seat) of the founders and the citizenship.

2. The prospectus may contain other provisions of importance for the issuance and the sale of the shares.

1. In case of non-money deposits and in case of agreement on special advantages in favour of the founders and other persons,the founders shall appoint one or several appraisers form the list of authorized appraisers nominated by the court.

2. The appraisers shall determine,to their own responsibility, the value of the non-money deposit and of the special advantages. The report shall be submitted to the registration court and placed to the disposal of the subscribers together with the draft-statute .

3. The founding assembly shall determine the value of the non-money deposits and recognize the special advantages.The founding assembly may reduce the value of the non-money deposits only upon the approval of all subscribers,i.e beneficiaries of the special advantages.

4. Should there be no approval of all investors and beneficiaries of the special advantages,entered into the record,the company shall be considered not to be founded.

1. The subscription to shares shall be made with a financial institution.

2. The payments may be made only as regular deposits.

3. With the financial institutions,where subscription to shares is being carried out, the founding deed and the draft statute shall be placed to the disposal of the subscribers ,and should a permit be required for its founding ,the permit i.e. a copy of the document proving issuance of a permit shall be also placed to the subscribers’ disposal.

1. Subscription of shares shall be carried out with a written statement (subscription form ) based on the provisions form the founding deed and the text form the prospectus.Each subscriber shall sign three copies of the subscription form,one for himself and one for the company.Should the subscription be carried out through an authorized person, the subscription forms for the company shall be accompanied by a letter of authorization.

2. The subscription form shall contain designations for :

• the number,type of the subscribed shares,their nominal value and the issuance value ,if required;
• the subscriber’s obligation that he will make payment for the share according to the existing conditions;
• the monetary value paid by the subscriber when subscribing the shares;
• a subscriber’s statement confirming that he is familiar with the founding deed,the draft statute and the prospectus and that he approves of the draft statute; and
• a subscriber’s signature ,his occupation and the place of residence,citizenship,i.e. the trade name and the title,seat and signature of the financial institution where subscription has been carried out,as well as a receipt issued by the financial institution about the received payment.

The subscription form shall bond the subscriber only if the company is founded.

1. The term of subscription to the shares may not be longer than three months counting form the day of the start of the subscription.

2. Should within the term stipulated for subscription all shares offer for subscription fail to be subscribed and paid for ,the founders may,15 days following the subscription term ,undertake the non-subscribed and unpaid shares or subscribe to them themselves.Should the shares offered for subscription in that manner fail to be subscribed to and paid for,founding shall be considered to be unsuccessful ,and the founders shall be obliged,within 15 days, to invite the subscribers to withdraw the paid amounts.The announcement shall be published in the same manner the prospectus had been published.

3. When founding of the joint-stock company appear to be unsuccessful,the persons who had entered deposits in objects or purchases at the time of founding,as well as those who had undertaken the shares without subscription on the basis of a prospectus,shall be invited to withdraw the amounts they had paid and the objects they had invested in the company.

Should a payment that had arrived prior to the entry of the joint-stock company into the trade register be made with delay,the founders may announce the undertaking i.e. the further subscription invalid,and may undertake the shares,i.e. to subscribe to them themselves or anybody else.

1. Should the subscription be successful,the founders shall within 15 days after the expiry of the term prescribed by the subscription announcement distribute among the subscribers.In the case form point 2 of article 256 of this law the term of distribution of the shares shall be one month form the expiry of the term prescribed for subscription.

2. At each point where subscription is being carried out ,the subscribers shall be given a full list indicating the total number of subscribed shares of each type and how many shares of each type had been given to each subscriber.The list shall contain an invitation to the subscribers to which not one share or all subscribed shares had been given ,to withdraw the paid amounts for which they had not been given shares.

3. In case of excessive subscription ( more subscribed shares than the number of shares issued by the company according to the founding deed),the founders may reject the excessive shares.

4. Whether the excessive shares shall be accepted or rejected,the founding assembly of the company shall decide while determining the basic capital assets.

5. Should the founders or the founding assembly reject the excessive subscription,within 30 days form the day of rejection the excessive shares shall be returned to the share subscribers.For fulfillment of this obligation the founders shall have joint and several liability.

1. The founders shall be forbidden to dispose of the sums paid for the shares.The managing organ may dispose of the sums after the entry of the company into the trade register.

2. Special compensations ,back payments and rewards may not be charged to the account of the basic capital assets.

1. After the subscription of the shares,two months following the expiry of the term prescribed by the announcement for subscription of shares,the founders shall call the subscribers to a founding assembly.The registration court in the area of which the company seat is located may ,at a justified request of a founder in a extrajudicial procedure ,prolong the term of holding of the founding assembly for 30 days.

2. Should the founders miss to convoke the founding assembly within the term stipulated by point 1 of this article,the subscribers of shares shall be relieved form the obligations and may demand refunding of the sum they had paid. For refunding of the sums paid for the subscribed shares the founders shall have joint and several liability.

3. The share subscribers shall participate in voting or may be represented in a manner and under conditions prescribed by this law concerning representing at the assembly of the company.

1. The founding assembly shall discuss and reach decisions by quorum and majority stipulated for by this law about the assembly of the company.

2. The shareholder may decide at the founding assembly according to the number of shares he possesses,i.e. the number indicated on the receipt of the share or the temporary receipt.

3. When the founding assembly discusses the approval of the evaluation of the non-money deposit or recognizing special advantages,the founder’s shares shall not be taken into consideration while determining majority. The investor shall not have a right to vote ,not for himself nor as a representative.

4. The founding assembly shall, by a separate decision, establish the fact that the basic capital assets has been subscribed to on the whole and the shares had been paid for up to the amount prescribed by the founding deed. The founding assembly shall come out for acceptance of the statute and shall nominate the members of the managing organ and the supervisory board.In the minutes of the founding assembly it shall be confirmed , should that be necessary, that the nominated members of the board of directors i.e. of the managing board and of the supervisory board had approved of the nomination.

5. The statute form point 4 of this article may be changed only upon an unanimous decision of the subscribers.

1. Should the assembly fail to adopt the proposal for the founding report to be examined again, the report must be examined should that be required by the subscribers and share undertakers representing one-fifth of the total shares paid for in money, provided the requirement had been made before the election i.e. nomination of the organs of the joint-stock company.

2. The subscribers and the undertakers of shares that had been paid for in cash shall elect three representatives. One of the representatives shall have the right , by separate voting, to elect the subscribers and the share undertakers who had required reexamination of the founding report. These subscribers and undertakers shall have the right to participation in the voting for the election of the other two representatives.

3. Once the representatives have been elected,the founding assembly shall stop its work for a period of seven days and shall,without an invitation ,fix the time of the next session of the assembly.

4. The representatives shall submit a report in writing to the founding assembly.Should the majority of representatives estimate the value of the deposits in objects and rights to be lower than two-thirds of the initial value,the founding assembly shall decide whether to proceed with the founding procedure .

5. In the voting for the decision form point 4 of this article the founders shall not take part, nor the subscribers and the share undertakers which the company should undertake the deposits form. They may not participate in the voting even as agents on behalf of other persons.

6. Should in the voting procedure majority not be reached,the founding of the company shall be considered to be unsuccessful,unless the founders or other persons at the assembly undertake all the shares of those who had voted against founding of the company and had declared their unwillingness to be shareholders. The share undertakers shall have to enter all arrived payments with the competent public notary and to fill i.e. to sign the subscription forms.

7. Should according to the representatives’ report ,voting on founding of the company not be necessary,the expenses for the reexamination of the founders’ report shall be jointly borne by those who had required reexamination. In all other cases the expenses for reexamination shall be borne by the founders.

1. The application for entry of founding of a joint-stock company into the trade register shall be immediately submitted by the managing organ of the joint-stock company.

2. The application for entry of the company into the trade register shall state that the conditions for founding of the company have been met and it shall indicate the amount the shares have been issued on and the sum paid for them. The application shall be accompanied by a proof that the company may freely dispose of the sum that had been paid.

3. The following documents shall be also attached to the application:

• the founding deed,as well as the statute;
• the enactment on undertaking of shares and one copy of the prospectus on the basis of which the whole sum or part of the basic capital assets had been subscribed ;
• the minutes of the founding assembly ,the invitation to it and the list of participants;
• the statemnt of the nominated managing organ confirming the fact that the payments for shares prescribed by law and by the statute had been effected and that upon the entry of the company into the trade register the company may freely dispose of the payments,as well as of the non-money deposits and purchases at the time of founding,as well as the receipt of a competent financial institution of the payments made in cash;
• the list of members of the board of directors,i.e. of the managing board and of the supervisory board by indicating their surnames and names,occupation and place of residence,citizenship,and should they be foreigners,statements of the members of the company confirming acceptance of their membership;
• the licence,if required according to the law and
• the report of the founders and of the appraiser,i.e. appraisers,should such report had to be prepared.

4. The application shall be signed by all members of the managing board before the court, unless their signatures had been previously authenticated.The nominated members of the board of directors i.e. of the managing board and of the supervisory board shall deposit their signatures with the registration court.

5. The submitted documents shall be kept in the registration court as originals, copies or as verified copies.

The court may reject the entry should the appraiser i.e. the appraisers declare or should it be obvious that the founders’ report or the report of the appraiser or of the appraisers is incorrect or incomplete or does not obey the provisions of the law.The court shall reject the entry also should the appraiser i.e. appraisers declare or should the court find the value of the deposit in objects and undertaken equipment drastically lower than the nominal value of the shares or under the sum of the payments that have to be effected due to that.

1. The entry of the joint-stock company shall be carried out once the statute of the company has entered the trade register.

2. Beside the data prescribed by this law,the following shall be also entered into the trade register:

• the date of founding of the company,and should a licence for founding be required,the organ that had issued the licence ,the day and the number the licence had been issued under;
• the trade name ,seat and subject of work;
• the amount of the basic capital assets and the amount of it that has been paid for;
• the type of shares i.e.wheather they had been issued to a name or to a bearer,the nominal value of the shares and the total value of each type of shares,as well as the priority rights arising form certain types of shares;
• the total sum of payments for the issued shares and the manner they had been effected,short indication of the deposits in objects and purchases,the monetary value they had been undertaken for,as well as the special benefit,compensations and rewards;
• the date of the adoption of the statute;
• the duration of the company;
• the statement of the members of the assembly of the company confirming the fact that they are familiar with the obligation to inform the registration court of the non-existence of circumstances that would be opposed to the provisions of this law;
• the authorizations of the members of the board of directors,i.e. the supervisory and the managing board,indicating the manner of representing and signing of the company,should it be different form the provisions of the law;
• the type of supervision over the operation of the company ;
• the manner of announcement of the decision of the assembly and of the other organs of the company,should it be regulated otherwise than the provisions of the law.

3. Also the surnames and the names,the occupation and the place of residence of the members of the board of directors i.e. of the managing board and of the supervisory board shall be entered into the trade register,as well as their citizenship should they be foreigners.

1. Beside the contents of the entry form article 270 of this law,the following elements shall also be announced :

the data form the statute that have not been entered into the trade register;

the provisions of the statute or of another enactments on the composition of the managing organ;

the issuance value of the shares;

the personal name ,the occupation and the place of residence of the founders.

2. The announcement shall also state the fact that the documents being announced may be reviewed in the court.

1. Everyone working on behalf of the joint-stock company prior to its entry into the trade register shall be personally liable,and should more persons work on its behalf,they shall be liable as solidary debtors.

2. Should the company before its entry into the trade register undertake an obligation that had been transferred to its name upon a contract concluded with a debtor,so that the company takes the place of the debtor,the undertaken debt shall produce legal effect without a consent of the creditor,provided that the undertaking of the debt had been agreed to be carried out within three months form the date of the entry of the company into the trade register and the creditor had been informed by the company or by the debtor.

3. Prior to the entry of the company into the trade register rights may not be undertaken form participation in other companies,nor shares or temporary shares may be issued.

4. The shares or the temporary shares issued prior to the entry into the trade register shall be null and void. The issuer of the shares shall be liable for the damages done to the holders.

1. The founders shall have joint and several liability to the joint-stock company for the authenticity and the completeness of the data related to the founding of the company or undertaking of the shares ,the payments for the shares,the use of the paid sums,the special profits and rewards,the founding expenses and investments in objects.

2. The founders shall also be liable for the fact whether the place determined for payment of the basic capital assets is suitable and whether the paid sums are at the disposal of the managing organ of the company.Beside compensating the damages,the founders shall also compensate the payments that had not been effected and the compensation that had not been comprised in the founding expenses.

3. Should the company suffer deliberate damages or damages out of negligence of the founders by investing,undertaking of objects or by the founding expenses,the founders shall have joint and several liability for compensation of the damages.

4. The founder shall not be liable for the damage is he had not been aware of the data which the obligation had been based on,nor had had to be aware of it provided that he had acted with the attention of an accurate and conscientious tradesman.

5. Should the company expel a tradesman who had been incapable of payment or incapable of investing objects,the damage shall be compensated the founders as solidary debtorswho had accepted the participation of the shareholder although they had been aware of his incapability to pay or his incapability to invest objects.

6. Beside the founders, the persons for the account of which shares had been undertaken shall be liable. These persons may not claim not to have been familiar with the circumstances which the person acting for their account had been or must have been aware of.

1. Beside the founders and the persons for the account of which the founders had undertaken the shares ,also the following persons shall compensate the damage as solidary debtors:

• the person who had accepted payments which ,contrary to the law,had not been accepted as expenses for the founding,had been aware or according to the circumstances must have been aware of the fact that the payments had been covered up or he had participated in the covering himself;
• the person who ,by investing objects had deliberately or out of negligence done damage to the company or had made the damage possible;
• the person who,prior to the entry of the company of the into the trade register or in the first two years after the entry ,announces that shares shall be put on sale, if he had been aware of the incorrectness and the incompleteness of the data concerning the founding of the company or of the damage done to the company by investing or undertaking objects, or must have been aware of if he had acted with the attention of an accurate and conscientious tradesman.

1. The joint-stock company may renounce its right to compensation toward the founders and the persons form article 274 of this law after three years form the day of the entry into the trade register or may square accounts with them,should the the assembly of the company reach a decision which shall not be opposed by minority possessing one-tenth of the basic capital assets.

2. The claim of the company for compensation of damages shall expire in five years .The expiry shall count form the day of the entry of the company into the trade register or should the action which the obligation for compensation be performed later,upon the performance of the action.

1. Should after the entry of the company into the trade register violation of the provisions of this law be discovered,and the violation could cause damage to the company, the shareholders or other persons, as well as any person having legal interest may within 30 days form the discovering the violation and within one year form the entry of the company latest, demand form the court to reach a decision on termination of the company.

2. The persons form point 1 of this article may within the same terms lodge a complaint for termination of the company should the statute not contain or should it violate some compulsory provision of the law.

The shareholders under equal conditions shall have equal position in the joint-stock company.

1. According to the statute of the company the shareholder shall be obliged only to payment of the nominal value of the share,to payment of the whole sum should it be issued under the nominal value or with an additional payment,as well as to delivering objects or rights should he pay for the share with objects and rights.

2. Money payments of the nominal value may be required equally for all shares that are to be paid for in money.

3. The shareholder may not settle his outstandings form the company with payments for the shares nor may exercise the right to withholding form the money payments.

4. The company may not postpone the payment for certain shareholders,nor relieve them form payment,nor may instead the payment accept anything else but what had been prescribed by the founding deed i.e. the statute.The non-money deposits consisting in outstandings shall be considered to be paid for after the company collects it.The company shall be liable to the shareholder should it,in the course of collection, fail to act with the attention of an accurate and conscientious tradesman.

5. More joint owners of a share shall have joint and several liability for the obligations arising form the share.

1. The shares shall have to make payment of the deposits to the invitation of the managing organ of the joint-stock company.The invitation shall be published in the company bulletin unless otherwise provided by the law.

2. The shareholder who has failed to make the payment on time shall have no right to vote until he makes the due payment with interest .The claim for compensation for the damage shall not be excluded,unless the statute prescribes penalty upon agreement.

3. The statute may prescribe losing the right of further payments in installments,as well as use of the dividend belonging to the shareholder up to the settlement of the due payment.

1. Should the shareholder fail to make the due payment with interest within 60 days as a result of delay or other obligations,the joint-stock company may without a repeated invitation deprive him form his right he is entitled to by the share or the temporary share. The joint-stock company shall inform the shareholder about that by the joint-stock company with a registered letter ,and enter it into the book of shares.

2. Should a former shareholder possess a share or a temporary share,the joint-stock company shall announce cease of the rights arising form it.

3. The company may sell the shares and the temporary shares kept by the company or by other institution ,within one month form the day the written information had been sent according to point 1 of this article, to the stock-exchange or offer it for public auction for the expense and risk of the shareholder.

4. Once the expenses for the information,announcement ,sale ,the interests for the delay and the agreed penalty have been covered,the assets form point 3 of this article shall be used for payment of the back payments.The rest of the sum of the former payments shall be delivered to the former shareholder ,unless the statute provides for the former payments to belong to the company.

5. Instead of the shares the rights had ceased form in accordance with point 2 of this article the company may issue new shares and treat them according to points 3 and 4 of this article.Beside the partial payments made, also the oustanding sum shall be indicated. For the loss of the company amounting this sum or the sum acquired later,the former shareholder shall be liable to the company.

1. Should the company not organize sale of the shares or the required amount not be achieved,the shareholder and all its predecessors registered in the book of shares and in any case the undertaker or the subscriber shall have joint and several liability for all outstandings in compliance with the articles 272 and 273 of this law.

2. The obligation form point 1 of this article shall expire in five years form the entry into the book of shares.The company may not relieve them form this obligation .

3. Should the share not be sold and the predecessors agree upon otherwise,they shall become holders of the share in proportion to their payments of the outstanding sum.

1. Should an outstanding payment for the share not be collected with half a year after the expiry of the business year in which the shareholder had been deprived form the rights arising form it,the managing organ shall upon the supervisory board’s consent decrease the basic capital assets for the nominal value of the share,thus the share ceasing to exist.The decrease shall be entered into the trade register and the entry shall be announced. Should the decrease exceed the amount of 5% of the basic capital assets,the company shall act in accordance with the provisions of this law on decrease of the basic capital assets.

2. Should the share be owned by the company or kept in a financial institution,the company shall annul it and in the annual report shall indicate the number of annulled shares, the shares which the ceased rights had arisen form ,the outstanding sum which the basic capital assets had been decreased for.

3. The paid amounts for the shares remaining in the company shall be entered in the general reserve after the reduction of the uncovered expenses according to the articles 280 and 281 of this law.

1. Except for the cases stipulated for by this law ,the deposit shall not be restituted to the shareholders. Payment of the purchase price when purchase of the shares by the company is allowed shall not be considered restitution.

2. Interests must not be guaranteed nor paid to the shareholders.

3. As an exception form point 2 of this article,at the time required for preparation of the start of the company ,the statute may stipulate for certain interests to be granted to the shareholders.The statute shall prescribe the term when payment of interests ceases.

1. Should an obligation be prescribed for secondary periodical non-money contibutions,the statute shall determine the conditions, the contents, the scope and the time of contributing. When the contributions may be compensated with payment,the statute shall determine the term and the basis for calculation. By payment the trading value of the contribution must not be exceeded. For delay in contributing a separate agreed penalty may be prescribed. The obligation and the scope of the contributions shall be indicated on the share.

2. The statute of the company may prescribe for the obligation of secondary non-money contributions to be carried out by the shareholder free of charge or with compensation.Should compensation be prescribed,it may be required regardless of the fact whether the company ended the business year with net profit.

3. The obligation of the separate contribution and the payment for it shall expire in three years.

1. Should the shareholder,against his will, fail to possess the share for a certain period of time or had acquired it by succession,by acquiring property as a whole or by calculation or division of joint property,the time for which the share had temporarily been possessed by another person shall be considered time of ownership of the shareholder.

2. The joint owners of the share issued by the company shall exercise their rights through a joint agent. The legal actions undertaken by the company toward the joint owners,shall be also carried out toward the agent,should he be registered with the company,i.e. toward any joint owner ,with legal effect to all.

3. The registration court may at the request of the company,appoint a trustee to the joint owners. The agent shall be entered into the book of shares,should the document in it be entered.

1. Should the managing organ be authorized by the statute ,it may in the course of the business year make advanced payment to the shareholders based on the expected profit according to the annual balance sheets.

2. The managing organ may effect the advanced payment should the temporary balance of success for the previous year show profit. At most half of the amount remaining form the annual profit after the reduction of amounts earmarked as reserves may be paid in advance.The advanced payment may not exceed the profit gained according to the annual balance sheets in the previous year.

3. The advanced payment shall be effected only upon the supervisory board’s consent and should it not be established,the consent of the non-executive members of the board of directors shall be required.

1. The shareholders shall have the right to a share in the profit,unless according to the decision of the assembly on the use of the profit reached according to the law or to the statute , the profit is excluded form distribution to the shareholders.

2. The share of the shareholders in the dividend shall be determined in proportion to the payments made.Should the payment for the shares not be effected in the same proportion,the calculation shall be carried out for the time that had passed since the payment.

3. The participation in the dividend shall be carried out in proportion with the payments made. Shoudl the payment for the shares not be made in the same proposition, the calculation shall be carried out for the time passed form the date the payment has been effected.

4. The statute may provide for the profit not to be distributed to the shareholders i.e. to the shareholders possessing certain type of shares,but to be used for another purpose prescribed in it

1. Should the shareholder be aware that he had accepted something in opposition to this law,i.e. to the provisions of the statute,he shall have to pay it back and compensate the damage done to the to the joint-stock company .

2. The shareholder shall not be obliged to pay back what he had accepted in good faith as share in the annual profit according to the accurately prepared balance of success,adopted by the assembly of the company.

3. The claim for forbidden acceptance against the shareholder shall expire in five years form the day of acceptance and in ten years in case the shareholder had been aware that the acceptance had been forbidden.

1. The shares issued to a name shall be entered in the book of shares of the joint-stock company.Also the name and surname,the place of residence,the citizenship and the occupation of the shareholder i.e. the trade name and the seat shall be entered into the book of shares.

2. Every person entered in the book of shares shall be considered to be a shareholder.

3. Should the company express doubt that some person had been entered into the book of shares ungroundlessly,it may erase him only upon an information sent to him setting a term for objection.Should he object within the set term ,the erasure shall be postponed to the moment the decision becomes final.

4. To a request of each shareholder,access to the book of shares shall be allowed.

1. The shares issued to a name may be transferred by endorsement.To the form of the endorsement and proving of the ownership of the share the provisions of the law shall be applied.

2. The statute may condition the transfer of the share upon the company consent.The consent shall be given by the managing organ,unless otherwise provided by the statute. The statute may set the terms under which the consent shall be given,i.e. the reasons for which the consent is not given.

3. The transfer of a share issued to another name shall be registered with the company.

1. The joint-stock company shall register the transfer or the changes in the book of shares.

2. The company shall check up the regularity of the order of endorsements and the statements of leaving.

3. The company shall not check the signatures.

4. Provisions of this article shall also be applied to the temporary shares.

1. The shareholders may conclude a mutual agreement according to which for a definite period of time the exercising of all or of some rights arising form their rights shall be entrusted to one or more representatives. The agreement shall be concluded in writing and be verified by the competent court.

2. Should the agreement provide extension of the agreement,each party of it may cancel its participation six months prior to the expiry of the term.Separate extension of the agreement may not exceed five years.

3. The agent must inform the agreement parties about his work at least once in six months.The agreement may set a shorter term.

4. Each party of the agreement may, without a period of notice,leave should any party or agent violate an important provision of the agreement.

1. The joint-stock company may purchase its own shares only with the profit or with the special reserves allowed by the last adopted annual balance sheet.The company may purchase only its own shares that had been paid for in full.

2. The assembly of the company shall reach a decision on allowing the purchase of its own shares and shall set the purchasing procedure.The decision must determine the number of shares that may be purchased,the lowest and the highest price that may be paid for them as well as the term for the purchase.

3. The term of purchase of shares form point 2 of this article may not exceed one year.

4. The nominal value of the shares that may be purchased may not exceed one-tenth of the basic capital assets of the company.

5. The purchase of shares in opposition to the provisions of this article shall be null and void.The shares must be sold within a year form the day they had been acquired in accordance with the decision form point 2 of this article.Should the shares fail to be abalienated within this term,they must be immediately annulled,and the procedure of corresponding decrease of the basic capital assets of the company shall be applied.

6. The provisions of this article shall be equally applied to purchase of own shares through a mediator or through a beneficiary.

1. The limitations set forth by article 293 of this article shall not be applied should the acquiring one’s own shares be done:

• on the basis of a decision of the assembly of the company on decreasing the basic capital assets by withdrawal or annulment;
• free of charge,provided that it is own shares fully paid for;
• as a result of uniform succession or merging and
• within a procedure of forced performing for settlement of outstandings of the company,proveided that it is own shares fully paid for.

2. Should in the cases set forth by the 1,2 and 3 of point 1 of this article the total nominal value of the acquired own shares exceed one-tenth of the basic capital assets,the excess shares must be sold within a year ,in the manner and under the conditions relating to the shares of the company.

1. The members of the board of directors,the members of the managing or the supervisory board as well as the other agents of the company must not dispose of the company’s own shares without a prior authorization.

2. The authorization form point 1 of this article and the conditions under which the shares shall be disposed of ,shall be prescribed by the assembly of the company.

3. Up to the moment the company possesses its own shares,the right to a dividend and the rights to priority purchase form the next issuance belonging to those shares shall be proportionally transferred to the other shares.The own shares shall not give the right to vote,but shall be taken into consideration in the course of establishing a quorum required for the work and decision-making at the assembly of the shareholders.

4. The joint-stock company must keep a special reserve the amount of which shall be equal to the value of its own shares set forth by the assets in the balance of state. This special reserve must not disposed of until the company sells its own shares or annuls them.

1. The joint-stock company may not subscribe to its own shares.

2. The shares subscribed to in opposition to the limitation form point 1 of this article shall be considered subscribed to and must be paid for by the founders,and in case of increase of the basic capital assets - by the members of the board of directors or by the members of the supervisory and the managing board.

3. Should a founder,a member of the board of directors,of a supervisory or the managing board prove he had not acted opposite to point 1 of this article shall be relieved form the obligation form point 2 of this article.

4. Each person subscribing to a share of the company in his name but for the account of the company shall be considered a person having subscribed to a share for his own account.

1. The company may not grant loans nor issue guarantees or other means of covering for the subscription to or for the acquiring of its own shares.

2. The company may not through an agent or a beneficiary accept own shares as covering.

3. The provisions of this article shall not be applied to acquiring the shares by the employees or by dependent or ruling companies.The loan,the guarantee or other type of covering for subscription to or acquiring own shares may not exceed the value of the profit or the value of the special reserves prescribed by the last adopted annual balance sheet.

1. The document for a lost or destroyed share or a temporary share may be declared invalid within the declaration procedure according to the rules of extrajudicial procedure s.

2. Should the coupons be issued to a name ,by declaring the share or the temporary share invalid ,the outstaings form the coupons that are still not due shall expire.

1. Should the contents of a share become incorrect due to changed legal relations,the joint-stock company may upon the court’s decision reached in a extrajudicial procedure declare the shares invalid ,which despite the invitation had not been submitted for correction or change.

2. Should the incorrectness of the shares be based on their nominal value, the shares may be declared invalid only if the nominal value had been decreased due to decrease of the basic capital assets.

3. Shares issued to a name may not be replaced should the designation of the shareholder become incorrect.

4. The invitation to submission of the shares shall contain the warning of declaring invalid and the approval of the court.The shares may be declared invalid should the invitation not be announced in the manner prescribed for the additional term set forth by this law. The annulment shall be carried out by publishing in the daily press.The information shall indicate the shares declared invalid.

5. Instead of the shares declared invalid,new shares shall be issued which shall be delivered to the relevant person,or,on the basis of a right to depositing,shall be deposited.The delivery and the depositing shall be registered with the registration court.

6. Should shares be collected because of decrease of the basic capital assets, the provisions of this law about the decrease of the basic capital assets shall be applied.

1. The owner of the coupon shall not be entitled to issuance of new coupons for collection of the dividend should the owner of the share disapprove of the issuance.

2. The coupons shall be delivered to the owner of the share who submits the main document.

1. The management of a joint-stock company may be organized according to a one-level system (board of directors) or to a double-level system (managing board and a supervisory board).

2. The joint-stock company shall chose the managing system.By change of the statute in the course of operation the one-level system of managing and running may be replaced with a double-level system and vice versa.

3. The provisions for the assembly of the company shall be applied also to the companies with one-level managing system and to the double-level managing system companies.

1. The board of directors shall be composed by non-executive and executive members (directors).

2. The board of directors shall consist by at least five and at most fifteen members.

1. In a joint-stock company employing less than 300 persons the non-executive members of the board of directors shall be nominated by the assembly of the company.

2. In a joint-stock company employing 300 and more persons the non-executive members shall be nominated also by the employees,should the statute provide for so.Should the majority of employees decide against the nomination of members of the board of directors,the employees shall not nominate members of the board of directors.

3. In the company form point 2 of this article the assembly shall nominate three-fourths of the non-executive members of the board of directors and the employees shall nominate one-fourth.

4. The assembly may nominate the first non-executive members by the founding deed or by the statute of the company.

5. Form the non-executive members,the members nominated by the assembly ,the board of directors shall appoint a president.

1. The executive members of the board of directors shall be nominated by the non-executive members by majority of votes. The statute may stipulate for the nomination of the executive members to be carried out by other majority or to be made upon an unanimous decision of all non-executive members of the board of directors.The executive members of the board of directors shall have equal rights and liabilities,regardless of the functions they perform according to the statute.

2. When the board of directors has more than one executive member,the non-executive members shall upon majority of votes determine the member particularly responsible for the issues of the employees and the relations with them.

1. A non-executive member nominated by the employees in the joint-stock company must be constantly employed in the company for two years prior to his nomination ,except for the case when the company has been established for a period less than two years.

2. All employees in the company having concluded an employment contract three months prior to the day of nomination of the non-executive members shall have the status of voters.The voting shall be made by secret ballot.

3. Should one position be intended for experts (engineers, lawyers, economists etc) the employees shall be divided into two collegiate bodies voting separately. The first body shall vote for the experts,and the second one shall vote for the other employees. The statute shall stipulate for the positions in each body according to the structure of all employees in the company.

4. Candidates for non-executive members of the board of directors nominated form the employees may propose on-fifth of the employees in the company,or,should the number of employees exceed two thousands,may propose 100 employees ,as well as the assembly of the employees.

5. The statute shall closely regulate the nomination of non-executive members by the employees.

1. The duration of the term of office of the non-executive members of the board of directors nominated by the employees shall be prescribed by the statute,but shall not be longer than six years. The term of office may be renewed unless otherwise provided by the statute.

2. The non-executive members nominated by the employees shall not be deprived form the rights arising form the employment.Their rewarding as employees may not be reduced due to performing the function of a member of the board of directors.

3. The termination of the employment shall be a basis for termination of the term of office of a member of the board of directors nominated by the employees.Excpet for the case of termination of employment at the request of the employee, a decision on termination of employment of a non-executive member of the board of directors nominated by the employees within the term of office may be reached by the court upon a claim.

1. Only physical persons of working age may be nominated executive and non-executive members of the board of directors.

2. Also a legal entity may be nominated non-executive member of the board of directors.

3. Not a single person may be nominated executive and non-executive member of the board of directors at the same time.

4. Should a legal entity be nominated non-executive member of the board of directors,it shall appoint a permanent member having the same rights ,obligations and responsibility as the other non-executive members. It may also have a joint and several liability represented by the representative.

5. Each employee in the company may be nominated member of the board of directors.By being nominated in the board of directors the person form point 3 of this article shall not lose the rights arising form the employment.The number of members of the board of directors permanently employed may not exceed two-thirds of the number of members of the board of directors.

6. At least one non-executive and one executive member of the board of directors must be a citizen of the Republic of Macedonia.

1. The members of the board of directors shall be nominated for a period stipulated in the statute,but shall not exceed six months.Should the term of office of the members of the board of directors not be determined by the statute,it shall last for four years.

2. Unless otherwise provided by the statute,the members of the board of directors may be nominated again.

1. The enactment for nomination of the members of the board of directors shall stipulate the manner and the amount of the reward of the executive,i.e. of the non-executive members of the board of directors.

2. The members of the board of directors may be entitled to a share in the profit .The share,as a rule,shall consist in a share in the annual profit of the company.

3. Should the members of the board of directors be entitled to a share in the annual profit of the company,the share shall be calculated according to the annual profit reduced for the loss transferred form the previous year and for the amounts which according to the law and the statute of the company are reduced form the annual profit for statutory reserves. provision opposed to this provision shall be null and void.

4. In the course of determining the total earnings of a member of the board of directors (wage,i.e. share in the profit,compensation ofexpenses, compensation for insurance etc.),the total earnings shall be brought into conformity with the tasks of the member of the board of directors and with his personal contribution to the successful work of the company and with the successful operation of the company as a whole.

5. Should after determining the earnings of a member of the board of directors the situation in the company aggravate drastically,as a result of which the earnings form point 4 of this article would burden the company ,they may be reduced proportionally. By reducing the earnings the agreement, i.e. the employment agreement of the executive member shall remain unchanged , and the member of the board of directors may resign at the end of the following three-month period earliest, upon a period of notice that may not be shorter than 30 days.

A non-executive member of the board of directors may not be simultaneously nominated in more than five board of directors i.e. managing boards of joint-stock companies with seats in the Republic of Macedonia.

1. Should one or more non-executive members of the board of directors stop performing their functions within the duration of the term of office or are prevented form performing it,and should the statute not provide otherwise,the other members of the board of directors shall continue their work until the vacancies are filled up at the following assembly.

2. Should the number of non-executive members of the board of directors be reduced below the minimum prescribed by the law,the members of the board of directors remaining shall immediately convene an assembly in order to complete the board of directors.

3. Should the number of non-executive members be reduced below the minimum number prescribed by the statute,but not below the minimum prescribed by the law, the board of directors may,within three months form the day which the function of the member in the board of directors had ceased on,fill up the board by appointing an acting member.Appointing an acting member must be approved at the following assembly of the company.Regardless of the fact if the appointing is approved of,the decisions reached and the action undertaken by the board of directors shall become valid.

4. Should the board of directors fail to make the necessary appointing or should it fail to convene the assembly,each person having legal interest may require form the competent court to appoint ,in a extrajudicial procedure ,a person to convene the assembly in order to carry out the appointing or to approve of the appointing carried out.

5. The provisions form points form 1 to 5 of this article shall not be applied in cases when the post of an executive member of the board of directors should be filled up.

1. Without the consent of the non-executive members an executive member of the board of directors must not perform any activity in another company,paid for or not,for his own account or for the account of another person.

2. Should the board of directors approve of some activity of an executive member,it shall inform the assembly of the company thereabout.

3. Prior to appointing of a physical person a non-executive member of the board of directors, the proposer shall inform the organ of the company authorized for nominating of all activities of that person in another company, paid for or not, that he performs for his own account or for the account of any other person.

1. Each agreement with the company as one of the parties where an executive or non-executive member of the board expresses certain interest,even indirectly,may be concluded upon an approval by at least majority of non-executive of the board of directors.

2. Should a member of the board of directors or the interested member ,acknowledge the fact that some of the conditions form point 1 of this article had been met, he shall inform the board of directors about it.The interested member has the right to be heard out,but may not take part in the discussion nor in the decision-making of the non-executive members concerning the agreement,nor in reaching the decision of the non-executive members on the approval form point 1 of this article.

3. The assembly of the company shall be informed about the approval form point 1 of this article.

4. On the basis of the board of directors having rejected to issue an approval or on the basis on the irregularity of the decision granting an approval outstandings toward third parties may not be claimed,unless the company proves that the third party had been aware of the non-existence of an approval or of the irregularity of the decision or must have been aware thereof.

1. The members of the board of directors shall be obliged to discharge the duties to the interest of the joint-stock company and to the interest of the shareholders.

2. The members of the board of directors shall be obliged to keep as business secret the confidential information’s related to the company in any way.

3. The obligation form point 2 of this article shall last even after the term of office in the board of directors, in conformity with the liabilities undertaken in the employment agreement.

1. The board of directors ,within the scope of its competence stipulated by the founding deed,the statute, the law and the authorizations he had been empowered with by the assembly of the company, shall have the widest competencies for acting in all circumstances on behalf of the company.

2. The enactments of the board of directors passed out of the competencies i.e. the authorizations form point 1 of this article ,shall bond the company in its relations with third parties, unless proved that third persons had been aware that the enactments had exceeded the competence i.e. the authorizations or must had been aware of considering all circumstances.

1. The executive members of the board of directors shall act as agents of the company in the relations with third parties and shall be responsible for conducting the business in the company.

2. Except for the authorizations the board had been empowered with by the assembly of the company,as well as for the special authorizations of the board of directors,the executive members shall have the widest authorizations within the scope of their competence to act on behalf of the company in all circumstances.

3. The activities i.e. the enactments of the executive members of the board of directors passed out of the competence i.e. the authorizations set forth by point 1 of this article,shall bond the company in the relations with third parties,unlessproved that the third parties had been aware that the activities i.e. the enactments had exceeded the competence i.e. the authorizations of the board of directors or must have been aware of considering all circumstances.

4. The announcement of the statute and its provisions limiting the competencies i.e. the authorizations of the board of directors must not be pointed out to third persons.

1. The board of directors may not transfer to the executive members the authorizations concerning reaching decisions on :

• termination or transfer of an enterprise or its part participating with over 10% in the income of the company;
• reducing or expanding the scope of activity of the company;
• organization changes in the company stipulated by an enactment of the company;
• establishing of a long-term cooperation with other companies or its cease and
• establishing and cease of subsidiaries of the company.

2. The statute of the company may forbid transferring the authorizations to the executive members of the board of directors also concerning reaching decisions on other issues of the board’s activities.

3. The limitations prescribed by the points 1 and 2 of this article may not be pointed out against third parties ,unless the company proves that the third party had been aware of the limitations or might have not been aware of it considering all circumstances.

1. The executive members of the board of directors shall at least once in a three-month period of time submit a written report on the work of the joint-stock company to the non-executive members.

2. The executive members of the board of directors shall after the expiry of the business year,in conformity with the law,submit the draft annual balance sheets and the annual report on the work of the company to the non-executive members .

3. At the request of the non-executive members of the board of directors the executive members shall be obliged to prepare a separate report on the state of the company or on some particular aspects of its work.

4. The non-executive members of the board of directors shall be authorized to undertake actions by themselves or through other persons in order to get an insight into the operation of the company and its managing by the executive members of the board of directors.At the request of at least one-third of the non-executive members,the executive members shall be obliged to prepare all documents required in order to provide the inspection over their work.

5. Each non-executive member shall be entitled to review all reports,documents and information submitted or prepared by the executive members for any non-executive member of the board of directors.

1. The board of directors may make valid decisions in the presence of at least half of all its members,out of which one half of the non-Executive members of the board. Any different provision shall be null and void.

2. Unless otherwise provided by the statute of the company,the decisions shall be reached upon majority of votes of the present members.

3. Unless otherwise provided by the statute of the company,the vote of the president of the board of directors shall be the casting vote in case of division of votes.

1. The members of the board of directors shall be obliged to discharge their duties with the attention of an accurate and conscientious tradesman and to keep the business secrets.

3. The members of the board of directors having violated their obligations in relation to the company shall be liable to the company for the damage done , as solidary debtors. In case of a dispute the members of the board of directors shall be liable to prove that they had acted with the attention of accurate and conscientious tradesmen.

3. The members of the board of directors shall be particularly considered responsible for damage ,should they,contrary to this law:

• return to the shareholders what they had invested in the company;
• pay interest or a dividend to the shareholders;
• subscribe to,acquire,take in pledge or withdraw the shares of the company;
• divide the company property;
• make payments after the company has become insolvent or over-indebted and
• in the course of increasing the basic capital assets issue shares contrary to the objectives or prior to the shares being fully paid for.

4. For elimination of the irregularities form point 3 of this article the shareholders shall have the right to demand compensation of damage form the members of the board of directors.The demand for compensation of the damage or the possibility of agreement on the damage may expire after three years form the date of submitting the demand, provided that the assembly of the company approves and the minority of votes possessing at least one- tenth of the basic capital assets does not object.

5. The members of the board of directors shall not be liable for the damage if they had worked in conformity with the decision of the assembly of the company that hey had adopted despite the warning that it had been opposite to this law.

6. Should the member of the board of directors violate its duty to act with the attention of an accurate and conscientious tradesman,a demand for compensation of damage may be also submitted by the creditors of the company which cannot collect their outstandings form the company.

7. The demands form the points form 1 to 5 of this law shall expire in five years.

1. An executive member of the board of directors may at any time be recalled by the non-executive members by majority of votes.Should an executive member of the board of directors be recalled without citing the reasons he shall be entitled to compensation of damage.

2. A non-executive member may be recalled at any time by the organ or by the persons he had been nominated by, in the same procedure that he had been appointed with.

Other rights of the executive members of the board of directors beside the rights and liabilities provided by this law, may be stipulated by the employment agreement concluded between the executive members and the joint-stock company.On behalf of the company the agreement shall be concluded by the non-executive members of the board of directors.

1. The managing board shall consist of at least three and at most eleven members.

2. The members of the managing board shall be nominated by the supervisory board.

3. The members of the first managing board may be nominated by the founding deed or by the statute.Upon the decision on nominating one of the members of the managing board ,he shall be entrusted the duty of a president of the managing board.

4. The supervisory board shall appoint a member of the managing board to be responsible for the issues of the employees and the relations with them.

1. Only physical persons of working age may be nominated members of the managing board, at least one of which must be a citizen of the Republic of Macedonia.

2. Not a single person may be a member of the managing board and a member of the supervisory board at the same time.

3. The members of the managing board shall be nominated for a period of time stipulated by the statute,but which may not be longer than six years.Should the statute not prescribe the term of office of the members of the managing board,it shall be four years.

4. The members of the managing board may be recalled by the assembly of the company at the proposition of the supervisory board. Should the recall be carried out without citing the reasons ,each member may demand compensation of damage.

5. If a member of the managing board has concluded an employment agreement with the company, the recalling shall not affect this employment agreement.

A member of the managing board must not ,at the same time , be nominated in more than five managing boards of joint-stock companies with seats on the territory of the Republic of Macedonia.