Slovenia

COMPANIES ACT (ZGD-1)

PART I

COMMON PROVISIONS

Chapter 1

GENERAL

Article 1

(Content of the Act)

This Act defines the basic status corporation rules of the foundation and operations of companies, sole proprietors, related persons, subsidiaries of foreign companies and their status restructuring.

Article 2

Transposition of directives and implementation of regulations of the European Community

(1) This Act transposes the following directives of the European Community into the legislation of the Republic of Slovenia: First Council Directive 68/151/EEC of 9 March 1968 on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community (OJ L No 65, 14. 3. 1968, p. 8) with amendments (hereinafter: Directive 68/151/EEC), Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ No L 26, 31 January 1977, p. 1) with amendments (hereinafter: Directive 77/91/EEC), Third Council Directive 78/855/EEC of 9 October 1978 based on Article 54(3)(g) of the Treaty concerning mergers of public limited liability companies (OJ L 295, 20. 10. 1978, p. 36) with amendments (hereinafter:

Directive 78/855/EEC), Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies (OJ L 222, 14. 8. 1978, p. 11) with amendments (hereinafter: Directive 78/660/EEC), Sixth Council Directive 82/891/EEC of 17 December 1982 based on Article 54(3)(g) of the Treaty concerning division of public limited liability companies (OJ L 378, 31. 12. 1982, p. 47) with amendments (hereinafter: Directive 82/891/EEC), Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts (OJ L 193, 18. 7. 1983, p. 1) with amendments (hereinafter: Directive 83/349/EEC), Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54(3)(g) of the Treaty on the approval of persons responsible for carrying out the statutory audits of accounting documents (OJ L 126, 12. 5. 1984, p. 20) with amendments (hereinafter: Directive 84/253/EEC), Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State (OJ L 395, 30. 12. 1989, p. 36) with amendments (hereinafter: Directive 89/666/EEC), and Twelfth Council Company Law Directive 89/667/EEC of 21 December 1989 on singlemember private limited-liability companies (OJ L No 395, 30. 12. 1989, p. 40) with amendments (hereinafter: Directive 89/667/EEC).

(2) This Act shall in greater detail determine the implementation of the following European Community Regulations: Council Regulation (EEC) No 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG) (OJ L 199, 31. 7. 1985, p. 1)(hereinafter: Regulation 2137/85/EEC), Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ L No. 243, 11. 9. 2002; p. 1) (hereinafter:

Regulation 1606/2002/EC), and Commission Regulation (EC) No 1725/2003 of 29 September 2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (OJ L No. 261, 13. 10. 2003; p. 1) with amendments (hereinafter: Regulation 1725/2003/EC) and Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Articles of Association of a European Company (OJ L No. 294, 10. 11. 2001; pp. 1-21) (hereinafter: Regulation 2157/2001/EC).

Article 3

Concepts

(1) A commercial company within the meaning of this Act is a legal person which independently pursues an activity with a view to profit in the market as its exclusive activity.

(2) An activity with a view to profit within the meaning of this Act is any activity pursued in the market for the purposes of obtaining a profit.

(3) Commercial companies (hereinafter: company) under the first paragraph of this article shall be organised in one of the following forms:

• as “personal companies”: an unlimited company, a limited partnership and a dormant partnership;

• as “companies with share capital”: a limited liability company, a public limited company a limited partnership with share capital and a European public limited company.

(4) Companies under the preceding paragraph shall be deemed to be companies also if, pursuant to the law, they pursue wholly or partly an activity without a view to profit.

(5) A company or an economic interest grouping may be founded by any natural or legal person, unless otherwise provided by law.

(6) An entrepreneur within the meaning of this Act is a natural person which independently pursues an activity with a view to profit in the scope of an organised company.

(7) Pursuant to this Act, the entry in the Register shall only have effect in respect of third parties as of the moment of the publication of individual piece of information in the Official Gazette of the Republic of Slovenia.

(8) For the purposes of this Act, other terms shall have the following meanings:

• an “auditor” is an audit company or an independent auditor holding a licence to perform audit services under the law regulating auditing;

• “The Securities Market Agency” (hereinafter: ATVP) is the Securities Market Agency under the act regulating securities market;

• “regulated market” is regulated market in accordance with the act regulating the securities market;

• “the Slovenian Institute of Auditors” is the Slovenian Institute of Auditors under the law regulating auditing;

“Member State” is a Member State of the European Community or the European Economic Area;

• “registration body” is a body keeping the register in which the data on the company are entered;

• “court« is a court with territorial jurisdiction with respect to the registered office of the company concerned.

Article 4

Legal personality

(1) All companies other than dormant partnerships are legal persons.

(2) As legal persons companies may own movable and immovable property, may acquire rights and assume obligations and may sue and be sued.

Article 5

Acquiring the character of a legal person

(1) Companies shall acquire legal personality upon their entry in the register.

(2) Prior to entry in the register the rules governing a contract of members in civil law shall apply to relations between the members.

(3) If a person acts in a company’s name prior to the entry of the company in the register, that person shall be personally liable with all his assets; if there are several such persons, they shall be jointly and severally liable.

(4) If through such actions members acquire rights of any sort, they must transfer them to the company after its entry in the register, unless the company refuses to accept them.

Article 6

Activity

(1) Companies may pursue as their activity all operations other than those which according to the law may not be pursued as commercial operations.

(2) The law may provide that certain commercial transactions may only be pursued by companies determined by law, or only by certain types of companies or other organisations.

(3) Companies may only pursue commercial transactions within the framework of the activity which is entered in the register.

(4) Notwithstanding the preceding paragraph, a company may also pursue all other transactions which are necessary for its existence and for pursuing its activity but which do not constitute the direct pursuit of the activity.

(5) Legal transactions concluded by a company with third persons which go beyond the activity entered in the register or otherwise permitted transactions shall be valid unless the third person knew or should have known about the transgression. The fact of the activity being stated in the register does not imply that the third person knew or should have known about the transgression.

(6) A company may take up and pursue its activity when it is entered in the register.

(7) If another law lays down special conditions for taking up and pursuing of a particular activity in addition to the condition laid down in the sixth paragraph of this article (hereinafter referred to as “special conditions”), the company may take up and pursue that activity when it meets the special conditions laid down in that other law. If another law provides that a company may take up and pursue a particular activity when the competent state body or organisation with public powers has issued a decision establishing that the company meets the conditions for taking up and pursuing the activity concerned, the company may take up and pursue that activity when the competent body issues a decision to that effect.

Article 7

Liability

(1) Entrepreneur and company shall be liable for their liabilities with all their assets.

Entrepreneur and company shall be equally liable in respect of liabilities arising from the operations of a dormant partnership under their control.

(2) The law shall determine when and how the members are liable in addition to the company.

Article 8

Disregard of the legal person

(1) Notwithstanding the preceding article, the members shall also be liable for the liabilities of the company in the following cases:

• if they abused the company as a legal person in order to attain an aim which is forbidden to them as individuals,

• if they abused the company as a legal person thereby causing damage to their creditors, or

• if in violation of the law they used the assets of the company as a legal person as their own personal assets, or

• if for their own benefit or for the benefit of some other person they reduced the assets of the company even if they knew or should have known that the company would not be capable of meeting its liabilities to third persons.

(2) The provisions laid down in the preceding paragraph shall also apply mutatis mutandis to the liability of a dormant partner.

(3) Courts shall decide a dispute as to the liability of members under the first paragraph of this article as a matter of priority.

Article 9

Validity of the provisions in this part of the Act

(1) The provisions laid down in this part of the present Act shall apply to all companies save where particular issues are otherwise regulated in some other part of this Act.

(2) This Act shall only apply to persons who, as individuals or jointly, pursue an agricultural or forestry activity if these persons are entered at their own request in the Companies Register of the Republic of Slovenia as a company or entrepreneurs.

Article 10

The management

The management means those bodies or persons authorised pursuant to this Act or the acts of the company to manage its operations. The management of an unlimited company shall mean the partners and, in the case of the transfer of the entitlement to conduct business, any third persons; the management of the limited partners shall mean the general partners and, in the case of the transfer of the entitlement to conduct business, any third persons; the management of the public limited company shall mean the management board and the management of the limited liability company shall mean one or more managers.

Article 11

Disclosure of information and communications of the company, use of language

(1) Where a law lays down an obligation to disclose certain information or communications of the company these shall be published in the Official Gazette of the Republic of Slovenia, unless otherwise provided by law. If the Articles of Association lay down the obligation to disclose certain information or communications of the company these shall be published in the Official Gazette of the Republic of Slovenia or a daily newspaper, or as otherwise provided by law. Such information or communications of the company shall be published in the company’s newsletter or, if existing, its electronic media (hereinafter: the company’s newsletter or electronic media).

(2) The management must ensure that communications with employees within the company in connection with the issuing of work instructions to employees, the conduct of procedures in which the rights of employees are decided and the participation of employees in the management of the company are conducted in Slovene, and in areas inhabited by the Italian and Hungarian ethnic minorities communications may also be conducted in Italian or Hungarian respectively.

(3) All the acts of the company must be written and published in Slovene:

• if they are stipulated by law or by the articles of association of the company as compulsory, or

• if they are intended for the members or if they are important for the exercise of their rights and duties, or

• if they are intended for people employed by the company, or

• if they are addressed to citizens of the Republic of Slovenia in connection with the company’s affairs.

(4) In areas inhabited by the Italian and Hungarian ethnic minorities, Italian or Hungarian respectively may also be used in the acts referred to in the preceding paragraph.

(5) The provisions laid down in the third and fourth paragraphs of this article shall not prejudice the regulations on the language of official business in the Republic of Slovenia and on the language for operations with consumers in the

Republic of Slovenia.

Chapter 2

REGISTERED NAME

Article 12

The concept of a registered name

(1) The registered name is the name under which the company operates.

(2) The registered name must contain an indication of the activity pursued by the company.

Article 13

Additional elements

The registered name may contain additional elements which characterise the company in more detail; however, these elements may not be such as cause misunderstanding or could cause misunderstanding as to the type and scope of operations or could lead to a confusion with the registered name or distinguishing symbol of another person or infringe the rights of other persons.

Article 14

Names of foreign countries

A registered name may not contain the names or symbols of foreign countries or international organisations.

Article 15

Use of the word Slovenia and the designations of the state or local self-governing communities

(1) The word Slovenia or derivations and abbreviations thereof and the flag and coat of arms of the Republic of Slovenia may only be used in a registered name with the permission of the Government of the Republic of Slovenia (hereinafter: the Government).

(2) Permission from the Government or the competent authority of the local selfgoverning community shall also be required for words to be used in the registered name which designate the state or the local self-governing community (e.g. state, republic or municipal).

Article 16

Name and surname of the person

The name and surname or alias of a historical or other famous person may only be used in a registered name with the permission of that person; if that person is dead, permission shall be required from the spouse, persons related by blood in direct line to the third generation and the parents, if they are still alive, and the permission of the minister responsible for public administration shall also be required.

Article 17

Elements not permitted

A registered name may not contain words or symbols which:

• contravene the law or morals;

• contain the known trademarks and service marks of another entitled person; or

• contain or imitate official symbols.

Article 18

Deleting an element of a registered name

At the proposal of the bodies or persons referred to in Articles 15 and 16 of this Act, the registration body shall delete an element of a registered name from the register if the operations of the company damage the reputation of the state, self-governing local community or person referred to in Article 16 of this Act.

Article 19

Use of a registered name

(1) In its operations a company must use its registered name in the form in which it is entered in the register.

(2) A company may also use an abbreviated registered name which contains at least an element distinguishing it from the registered names of other companies and a designation indicating what type of company it is.

(3) The abbreviated registered name shall be entered in the register.

Article 20

Language of a registered name

(1) A registered name must be Slovene.

(2) A translation of a registered name into a foreign language may only be used together with the registered name in Slovene.

(3) The first paragraph of this article notwithstanding, foreign words may be used in a registered name:

• if they correspond to the registered names or the names and surnames of members which are an integral part of the registered name, or

• if they correspond to the trademarks or service marks ,

• if they are invented words not containing foreign characters, or

• if they are from a dead language.

Article 21

Principle of exclusivity

(1) A registered name must be clearly distinct from the registered names of all other companies.

(2) If a member in an unlimited company or a general partner in a limited partnership whose surname is part of the registered name has the same surname as contained in the previously registered name of another unlimited company or limited partnership, the registered name must include an element which clearly distinguishes it from registered names that are already registered.

(3) Affiliated companies may use common elements in their registered names.

Article 22

Intended registered name

(1) Anyone may require the registration body to enter a registered name in the register without the company being founded at the same time (intended registered name).

(2) An intended registered name must conform to the provisions laid down in this chapter on registered names.

(3) The registration body shall delete an intended registered name from the register ex officio if the person who registered the intended registered name does not register the founding of a company with that name within one year of the registration of the intended registered name.

Article 23

Protection of a registered name

(1) The registration body shall reject a proposal for the entry in the court register of a registered name which contravenes the provisions laid down in this chapter or is not clearly distinct from registered names already registered in the Republic of Slovenia.

(2) A company which believes that the registered name of another company is not clearly distinct from its own previously registered name shall have the right to sue to require that the name not be used, for it to be deleted from the register and to claim compensation.

The suit must be lodged no later than three years after the registration of the registered name of the other company or the registration of an intended registered name.

(3) A suit under the preceding paragraph may also be lodged by a company whose registered name is prejudiced if another company uses its registered name improperly.

(4) The provisions laid down in this article shall not prejudice the provisions contained in the regulations on protection of competition and other regulations protecting registered names.

Article 24

Transfer of a registered name

A registered name can only be transferred together with the company.

Article 25

Termination of membership of a company

(1) If a member whose name or surname is contained in the registered name ceases to be a member of the company, the company may only continue to operate under its existing registered name with the explicit consent of that person.

(2) If a member dies, his inheritors may require, within three months of the issue of a final decision on inheritance, that his name or surname be removed from the registered name.

(3) In the case under the preceding paragraphs it must be clear from the registered name that the member has ceased to be a member of the company.

Article 26

Deletion of the name or surname of an ex-member

At the proposal of the member or his inheritor under the preceding article the registration body shall delete his name or surname as an element of the registered name from the register if the company’s operations damage his reputation.

Article 27

Registered name

(1) The registered name of an unlimited company must contain the surname of at least one of the members and a statement to the effect that there is more than one member, and the designation d.n.o.

(2) The registered name of a limited partnership must contain the surname of at least one general partner and the designation k.d. The surnames of limited partners (“commanditaires”) may not be included in the registered name.

(3) A dormant partnership shall operate under the registered name of the holder of the dormant partnership. The registered name of the holder of the dormant partnership may contain an addition indicating that the company is operating with a dormant partner (“s t.d.”).

(4) The registered name of a limited liability company must include the additional element under Article 13 of this Act and a designation d.o.o.

(5) The registered name of a public limited company must include the additional element under Article 13 of this Act and a designation d.d.

(6) The registered name of a limited partnership with share capital must include the designation k.d.d.

Article 28

Registered name of a company in which another company is a member

If a member in an unlimited company or a general partner in a limited partnership is a company, the registered name of that company shall be included in the registered name under the first and second paragraphs of the preceding article.

Chapter 3

REGISTERED OFFICE

Article 29

Concept

The registered office of a company is the location entered in the register as the registered office of the company.

Article 30

Determining the registered office

The location where a company pursues its activity or the location where it predominantly carries out its operations, or where its management operates, may be determined as its registered office.

Article 31

Branches

(1) A company may have branches which are separated from the registered office of the company. Branches shall be entered in the register.

(2) Branches are not legal persons but may carry out all operations which the company may carry out.

Chapter 4

REPRESENTATION

Article 32

Representation of a company

(1) A company shall be represented by persons so determined by law or by the founding act of the company pursuant to law (statutory representative).

(2) A representative may carry out all legal acts falling within the legal capacity of the company. Restrictions in the articles of association or other restrictions shall have no effect in respect of third persons.

Article 33

Procuration

(1) A company may grant procuration to one or more persons in accordance with the procedure laid down in its founding act.

(2) A company may appoint one or more procurators for a branch alone, provided that such an appointment is explicitly indicated in the register and as an addition to the procurator’s signature, otherwise it shall be considered that the procuration applies to the whole company.

Article 34

Joint procuration

(1) Procuration may be granted to two or more persons jointly so that only all these persons together may represent the company.

(2) Third persons may also legitimately express their will to one of the joint procurators alone.

(3) According to the articles of association, a company may be represented by a procurator together with one or more legal representatives.

Article 35

Scope of procuration

(1) A procuration shall confer authority to carry out all legal actions falling within the legal capacity of the company other than the disposal and burdening of immovable property, for which the procurator must be specifically authorised.

(2) Restrictions on procuration shall have no legal effect in respect of third persons.

Article 36

Termination of procuration

A procuration may be revoked at any time.

Article 37

Transfer of procuration

A procurator may not transfer the procuration to another person.

Article 38

Registration of procuration

(1) A company must report the granting and termination of a procuration for entry in the register.

(2) A specimen of the procurator’s signature shall be kept with the court. When signing for the company the procurator shall use that signature with an indication that it is done on the basis of a procuration.

Chapter 5

BUSINESS SECRETS AND BAN ON COMPETITION

Article 39

The concept of a business secret

(1) A business secret shall be deemed to be data so determined by the company in a written resolution. The members, employees, members of management bodies of a company and other persons obliged to protect business secrets shall be acquainted with this resolution.

(2) Irrespective of whether it is covered in a resolution under the preceding paragraph of this article, any data whose disclosure to an unauthorised person would clearly cause substantial damage shall also be deemed to be a business secret. The members, employees, members of management bodies of the company and other persons shall be liable for any disclosure of a business secret if they knew or should have known that the data was of such nature.

(3) Information defined by law as public or information about violations of the law or fair business practice may not be determined as business secrets.

Article 40

Protection of a business secret

(1) In a written resolution under the first paragraph of the preceding article the company shall determine the method of protecting business secrets and the responsibility of persons obliged to protect business secrets.

(2) Persons outside a company shall also be obliged to protect data constituting a business secret of the company if they knew or, given the nature of the data, should have known that it was a business secret.

(3) Any actions by which persons outside a company attempt in contravention of the law and the will of the company to obtain data constituting a business secret shall be prohibited.

Article 41

Ban on competition

(1) Members in an unlimited company, general partners in a limited partnership, members and managers in a limited liability company, members of the management board and supervisory board of a public limited company and procurators may not participate in any of these roles or be an employee in any other company, or as a entrepreneur pursue an activity, which is or could present competition to the activity of the first company.

(2) The founding act of a company may provide that the restrictions under the preceding paragraph also apply to limited members in a limited partnership or shareholders in a public limited company and a limited partnership with share capital or to members of an economic interest grouping.

(3) The founding act of a company may set conditions under which the persons referred to in the first paragraph of this article may participate in a competing company.

(4) The founding act of a company may provide that the ban on competition shall continue after a person has lost the property of a person under the first paragraph of this article. The ban may not last more than two years except in the cases under the second paragraph of Article 268 and the third paragraph of Article 515 of this Act, when the ban may not last more than six months.

(5) The provisions laid down hereunder shall not prejudice the prohibition on competition applying to persons in an employment relationship.

Article 42

Violation of the ban on competition

(1) If a person violates the ban on competition the company may claim compensation.

(2) The company may also require the offender to cede to the company any operations concluded for his own account as operations concluded for the account of the company, or require the offender to transfer to it any benefits from operations concluded for his own account, or to cede to the company his right to compensation.

(3) Claims of the company under the preceding paragraphs shall be time-barred three months after the company learns of the violation and of the offender, and within five years at the latest of when the violation was committed.

Chapter 6

THE REGISTER

Article 43

Subject of entry

Data on the company shall be entered in a register as provided hereunder.

Article 44

Register

(1) The register shall be kept by the court.

(2) The procedure of registration matters shall be regulated by a special law.

Article 45

Disclosure of data entered in the register

(1) All communications which a company sends to an addressee must indicate, in addition to the full registered name and registered office, the registration body at which the company is registered, the number of the registration entry; for a limited liability company and a public limited company the amount of subscribed capital and the amount of contributions not yet paid in shall also be stated.

(2) Order forms shall be deemed to be communications within the meaning of the preceding paragraph.

Article 46

Persons entitled to submit an application

An application for the entry of a company may be submitted by a person who under the law or in accordance with the company’s acts is entitled to represent the company, unless otherwise provided by this Act.

Article 47

Application for first entry in the register

(1) An application for the first entry of a company in the register must contain the registered name, the activity, the registered office and other data determined by law.

(2) The original or a certified copy of the founding act and the act appointing the management, where not already determined in the founding act, must be submitted together with the application.

(3) An application must be submitted within 15 days of the fulfilment of the conditions for entry in the register.

Article 48

Reporting changes for entry in the register

(1) Any change to the data referred to in the first paragraph of the preceding article, together with the acts on which the changes are based, the commencement of liquidation proceedings including the names of the liquidators, and the dissolution of the company must also be reported for entry in the register.

(2) The provision of the third paragraph of the previous article shall apply mutatis mutandis to the reporting of changes for entry in the register.

Article 49

Keeping signatures

The certified signatures of representatives of the company and other persons determined by this Act must be deposited with the registration body.

Chapter 7

NON-LITIGIOUS CIVIL PROCEDURE

Article 50

Cases decided by the court in a non-litigious civil procedure

The court shall decide the following matters in a non-litigious civil procedure:

• revocation of the member’s entitlement to conduct business or represent (Articles 90 and 99);

• granting permission to a member to take over a company without liquidation (first paragraph of Article 116);

• appointment or recall of liquidators (second paragraph of Articles 119 and 120 and Article 408);

• determination of the member or third person who stores the books of account (second paragraph of Article 132);

• the delivery of a copy of the annual report to a limited or dormant partner (second paragraph of Article 140 and Article 162);

• appointment of a founding auditor, a special auditor, an extraordinary auditor, an auditor, an acquisition auditor and a division auditor (Article 194, second paragraph of Article 318, first paragraph of Article 322, second paragraph of Articles 360, 386, 583 and 627);

• disagreements between the founders and the founding auditors (second paragraph of Article 196);

• extending the time limit for holding the founding general meeting (third paragraph of Article 214);

• the publication of an announcement calling upon the share subscribers to collect their payments (third paragraph of Article 215);

• market value of shares, traded on a regulated market (sixth paragraph of Article 237);

• permission to annul shares (second paragraph of Article 244);

• appointment or recall of members of the management or supervisory bodies (Article 256 and second paragraph of Article 276);

• authorisation to convene the general meeting or to publish the subject which the general meeting should decide (third paragraph of Article 296);

• the shareholder’s, member’s or interested party’s right to be informed (Articles 396 and 513 and the second paragraph of Article 637);

• appropriate compensation to minority or withdrawing shareholders (second paragraph of Article 388 and third paragraph of Article 556);

• the amount of the payment to the liquidator (first paragraph of Article 423);

• compensation and cash payment for external shareholders (fourth paragraph of Article 552 and fifth paragraph of Article 553);

• appointment of special or joint representative (second paragraph of Article 595 and first paragraph of Article 608);

• proposal for a court test of the exchange ratio (first paragraph of Article 605);

• matters concerning the European public limited company, laid down in Articles 8, 25, 26, 55 and 64 of the Regulation no. 2157/2001/EC, and

• other matters which in accordance with the provisions of this Act are to be decided by the court in a non-litigious civil procedure.

Article 51

Jurisdiction of the court

The district court shall have jurisdiction to decide the matters referred to in the previous article.

Article 52

Special provisions on procedure

(1) The provisions of the law regulating the non-litigious civil procedure shall apply for the purpose of deciding matters referred to in Article 50 of this Act unless provided otherwise in the second paragraph hereunder.

(2) The court must decide a proposal on matters referred to in points 5, 6, 8, 13, and 14 of Article 50 of this Act within five days of receipt of the proposal. An appeal shall be permitted against the court’s decision in these cases within three days of the delivery of the decision. An appeal shall not suspend the execution of the decision.

(3) If a proposal is grounded, the proposer’s costs shall be covered by the company, unless otherwise determined by this Act.

Chapter 8

BOOKS OF ACCOUNT AND ANNUAL REPORT

Section 1

GENERAL PROVISIONS

Article 53

Application of provisions and meaning of terms

(1) The provisions of this chapter shall apply in full to:

1. companies with share capital;

2. personal companies in which there is no natural personal liable without limitation for the company’s liabilities;

(2) All provisions of this chapter apart from the provisions of Article 57 of this Act shall apply to an entrepreneur whose undertaking meets the criteria for classification as a medium-sized or large company.

(3) For other personal companies that are not personal companies under the first paragraph of this article, and for entrepreneurs whose undertakings meet the criteria for classification as small companies, only the provisions of Articles 54, 58 to 60 and 65 to 67 of this Act shall apply. In applying the aforementioned provisions such companies shall adapt the categorisation and designations of capital items to the company’s own circumstances and may use all the simplifications applicable to small companies.

(4) The terms in this Section shall have the following meaning:

• a member is a member in a personal company or in a limited liability company or a shareholder;

• a share is a participating share in a limited liability company or a share in a public limited company;

• the articles of association means the contract of members of a personal company or the contract of members of a limited liability company or the founding act of a limited liability company, if founded by a single person, or the articles of association of a public limited company;

• the balance sheet date is the date at which the balance sheet is drawn up; the balance sheet date for the annual balance sheet is the last day of the financial year.

• Slovenian Accounting Standards shall be accounting standards adopted by the Slovenian Institute of Auditors in accordance with this Act and

• International Financial Reporting Standards shall be the standards determined as international accounting standards by the Regulation 1606/2002/EC and Regulation 1725/2003/EC.

Article 54

General accounting rules

(1) The companies and the sole traders must keep the books of account and make yearend accounts once a year in accordance with the Slovenian Accounting Standards or the International Financial Reporting Standards, unless otherwise stipulated by the law. The financial year may differ from the calendar year. Annual financial statements shall be compiled every financial year on the basis of the closed books of account within three months of the end of the financial year.

(2) The three-month time limit referred to in the first paragraph of this article shall also apply to the compilation of the annual report referred to in Article 60 of this Act. The consolidated annual report referred to in Article 56 of this Act must be compiled within four months of the end of the financial year.

(3) Books of account shall be kept in accordance with the double-entry book-keeping system.

(4) At least once a year the balance of individual assets and liabilities items in the books of account shall be checked against their actual balance.

(5) If a liquidation or bankruptcy procedure is initiated against a company or entrepreneur, a balance sheet and profit and loss account shall be drawn up as at the last day prior to the initiation of this procedure.

(6) The books of account, balance sheet, profit and loss account, annual report and business report referred to in Article 56, Article 60 and the first paragraph of Article 70 of this Act shall be stored permanently. Accounting documents may be stored for a specific period only.

(7) More detailed rules on accounting shall be defined by the Slovenian Accounting Standards which are adopted by the Slovenian Institute of Auditing in agreement with the ministers competent for economy and finance. Before granting such approval, the ministers competent for economy and finance shall publicly invite those interested to issue any opinions on such matter. After receiving the approval, the Slovenian Institute of Auditors must publish them in the Official Gazette of the Republic of Slovenia.

The Slovenian Accounting Standards shall set out in particular:

1. the contents and breakdown of the cash flow statement and capital flow statement,

2. the rules on the evaluation of accounting items, and

3. the rules relating to the content of individual items in the financial statements and the explanations of these items in a supplement to the financial statements.

(8) The Slovenian Accounting Standards may not be contrary to this Act and other acts regulating the rules on accounting of individual legal entities and the provisions issued on their basis.

(9) Slovenian Accounting Standards shall transpose the content of European Community Directives 76/660/EEC and 83/349/EEC and the amendments and additions thereto.

(10) The companies whose securities are listed on one of the organised securities markets in the European Community Member States and which are subject to consolidation on the basis of Article 56 hereof must compile consolidated financial statements stipulated by the seventh paragraph of Article 56 hereof in accordance with the International Financial Reporting Standards (IFRS).

(11) Besides the companies referred to in the previous paragraph, the financial reports stipulated by the first paragraph of Article 60 hereof in accordance with the International Financial Reporting Standards shall also be compiled by:

1. banks,

2. insurance companies and

3. other undertakings if so decided by the assembly of the undertaking, but for the minimum period of five years.

Article 55

Micro, small, medium-sized and large companies

(1) For the purposes of applying the provisions of this chapter, companies shall be classified as micro, small, medium-sized and large on the basis of the following criteria at the balancing date of the annual balance sheet:

• average number of employees in a financial year,

• net sales income,

• value of assets.

(2) A micro company shall be a company meeting two of the following criteria:

• average number of employees in a financial year does not exceed 10,

• net sales income does not exceed 2,000,000 euros, and

• value of assets does not exceed 2,000,000 euros.

(3) A small company shall be a company not a micro company under the preceding paragraph and meeting two of the following criteria:

• average number of employees in a financial year does not exceed 50,

• net sales income does not exceed 7,300,000 euros, and

• value of assets does not exceed 3,650,000 euros.

(4) A medium-sized company is a company which is neither a micro company under the second paragraph of this article nor a small company under the previous paragraph of this article:

• average number of employees in a financial year does not exceed 250,

• net sales income does not exceed 29,200,000 euros, and

• value of assets does not exceed 14,600,000 euros.

(5) A medium-sized company is a company which is neither a micro company under the second paragraph of this article nor a small company under the third paragraph of this article nor a medium-sized company under the previous paragraph.

(6) For the purposes of applying the provisions of the previous chapters, companies shall be classified as micro, small, medium-sized and large on the basis of the data of two consecutive business years at the balancing date of the annual balance sheet.

(7) The provisions of this Act and other regulations referring to small companies shall also apply to micro companies, unless otherwise stipulated in this Act or other regulations.

(8) In any case the following shall be deemed to be large companies for the purposes of this chapter:

• banks,

• insurance companies,

• stock exchange,

• companies obliged to draw up a consolidated annual report in accordance with Article 56 of this Act.

Article 56

Consolidated annual report

(1) A company with its registered office in the Republic of Slovenia which is the parent company of one or more companies having their registered office in or outside the Republic of Slovenia (subsidiary companies) must compile a consolidated annual report if either the parent company or one of the subsidiary companies is organised as a company with share capital, a dual company or an equivalent legal form in accordance with the law of the country in which the company’s registered office is located.

(2) A company is the parent company of another company if one of the following conditions is fulfilled:

1. If it has a majority of the voting rights in the other company, or

2. If it has the right to appoint or recall a majority of the members of the management board or the supervisory board and is at the same time a member of the other company;

3. If it has the right to exercise control over the other company on the basis of an undertaking contract or an another legal basis, or

4. If it is a member in the other company and if, on the basis of an agreement with another member in this company, it controls a majority of the voting rights in this company.

(3) In the application of points 1, 2 and 4 of the previous paragraph of this article the voting rights or appointment and recall rights held by another company controlled by the parent company and any such rights of persons acting on behalf of the parent company shall be added to the voting rights or appointment and recall rights held by the parent company or its subsidiary. The rights arising from the possession of shares for the account of a person which is not a parent company or its subsidiary and the rights arising from shares obtained as guarantee, if exercised in accordance with the received instructions or obtained through the granting of loans as part of ordinary business activity shall not be considered the rights under the previous sentence if the voting rights are exercised in the interest of a person who issued such guarantee.

(4) In the application of Points 1 and 4 of the second paragraph here under, of the total amount of voting rights in the subsidiary, the voting rights arising from stakes of such company, its subsidiary or a person acting on its own behalf but for the account of such companies, shall be deducted.

(5) A parent company which, together with its subsidiaries, does not meet the conditions to be classified as medium-sized company in accordance with the fourth paragraph of Article 55 hereof, the criteria of net sales income and the value of assets being increased by 20%, shall not be obliged to produce a consolidated annual report. This shall not apply if the securities of the parent company or any of its subsidiaries are traded on the regulated market.

(6) The consolidated annual report must provide a true and honest presentation of the financial position, profit and loss account, cash flows and capital flows of all the companies included in the consolidation as a whole. For each company included in the consolidation, the conditions of the second paragraph hereunder, on the basis of which an individual company was included in the consolidation, must be stated in the notes to consolidated statements.

(7) The consolidated annual report shall comprise a consolidated accounting report and a consolidated business report of the group of companies included in the consolidation. The consolidated accounting report shall comprise a consolidated balance sheet, a consolidated profit and loss account, a consolidated capital flow statement, consolidated cash flow statement and notes to the consolidated statements. These constituents of the consolidated accounting report shall constitute the whole. The provisions of this Act on annual report shall apply mutatis mutandis to the form, content and adoption of the consolidated annual report.

(8) A subsidiary company shall not have to be included in the consolidation if its inclusion is not necessary in order to provide a true and fair presentation under the sixth paragraph of this article. In the notes to consolidated statements a company must state those subsidiaries that have not been included in consolidation for the reasons stated under the previous paragraph and explain the reasons for such decision. If more than one company meets the criterion set out in the first sentence they shall be included in the consolidation if all of them taken together are important for providing a true and fair presentation under the sixth paragraph of this article.

(9) Slovenian Accounting Standards shall lay down:

1. detailed criteria for defining subsidiary companies under the second paragraph of this article;

2. cases in which a parent company under the first paragraph of this article which is subsidiary by another parent company having a registered office outside the Republic of Slovenia is not obliged to compile a consolidated annual report and business report;

3. other cases in which a parent company under the first paragraph of this article is not obliged to compile a consolidated annual report and business report, or is not obliged to include individual subsidiary companies in the consolidation;

4. the method and scope of the consolidation and the content of the consolidated annual report with the exception of the companies referred to under the tenth and the eleventh paragraph of Article 54 hereof.

Article 57

Auditing

(1) The annual reports of large and medium-sized companies and the annual reports of small companies whose securities are traded on the regulated market must be examined by an auditor in accordance with the method and under the conditions laid down in the law regulating auditing. The auditor must also audit the accounting report and examine the business report to an extent sufficient to verify whether its content is in conformity with the other elements of the annual report. All these provisions shall apply also to the consolidated reports.

(2) The auditor’s report must contain the following:

• introduction providing the audited accounting report as well as the accounting framework utilised in its drawing up,

• description of purpose and extent of auditing, including the indication of auditing standards forming the basis of the auditing,

• audit opinion which must clearly indicate whether the accounting report reveals a true and fair view of financial situation pursuant to an appropriate accounting framework of reporting and, where necessary, whether the accounting report is in conformity with regulations; an audit opinion may be an opinion without reservation, an opinion with reservation or a negative opinion; an auditor may refuse to provide an opinion if he/she cannot express it,

• explanatory paragraph in which an auditor specially underlines or refers to any case, for which he/she considers it necessary, without expressing an opinion with reservation,

• opinion on conformity or non-conformity of the business report with the accounting report of the same financial year, date and signature of the auditor.

(3) The auditor shall be liable to the company and to its shareholders for damage caused to them through a violation of the rules on auditing laid down in the law regulating auditing. The auditor shall be liable for damage referred to in the previous sentence up to an amount of 150,000 euros. The limit on the liability for damage referred to in the preceding sentence shall not apply if the damage was caused intentionally or through gross negligence.

(4) If, in accordance with the law regulating auditing, the auditor declines to issue an opinion, the obligation under the first paragraph of this article shall not be considered fulfilled.

(5) The audit of the annual report referred to in the first paragraph of this article shall be performed within six months of the end of the financial year. The management board must submit the audited annual report or the audited consolidated annual report to the body of the company responsible for adopting the report, together with the audit report, no later than eight days after receipt of the audit report.

Article 58

Publication

(1) Annual reports referred to in the first paragraph of the previous article of this Act shall be submitted for the purpose of publication, together with the auditor’s opinion, to the Agency of the Republic of Slovenia for Public and Legal Records and Services (hereinafter: AJPES) within eight months of the end of the financial year.

The companies referred to in the first paragraph of Article 53 hereof must, in accordance with the preceding sentence, submit also the proposal of allocation of profits or treatment of loss and the allocation of profits or treatment of loss where this is not indicated in the annual report.

(2) The annual report of small companies whose securities are not traded on the regulated market and the annual report of entrepreneurs shall be submitted for the purpose of publication to AJPES within three months of the end of the financial year. The companies referred to in the first paragraph of Article 53 hereof must, in accordance with the preceding sentence, submit also the proposal of allocation of profits or treatment of loss and the allocation of profits or treatment of loss where this is not indicated in the annual report. Entrepreneurs subject to tax on the basis of the established profit with the consideration of normed costs under the provisions on the tax on income from business activities of the act regulating income tax, shall not be obliged to submit annual reports for the purpose of publication. The Tax Administration of the Republic of Slovenia shall send the list of entrepreneurs referred to in the preceding sentence to AJPES.

(3) AJPES shall publish the annual reports and consolidated annual reports, together with the auditor’s report, submitted in accordance with the first paragraph of this article, or the annual reports submitted in accordance with the second paragraph of this article by capturing them in computerised form and publishing them on a website intended for publication of annual reports. In accordance with the preceding sentence, the proposal of allocation of profits or treatment of loss and the allocation of profits or treatment of loss must be simultaneously published for the companies referred to in the first paragraph of Article 53 where this is not indicated in the annual report. The website referred to in the preceding sentence hereunder must be designed in such a way that the data published on it may be accessed by anyone free of charge.

(4) At the same time as it publishes the reports referred to in the previous paragraph of this article AJPES must notify the registration body of the publication. The following details shall be provided in the notification:

1. the uniform identification of the company with which the subject is uniformly defined in the Business Register of Slovenia in accordance with the law regulating the keeping of a business register,

2. the date and method of the publication referred to in the previous paragraph of this article,

3. and also in the case referred to in the first paragraph of this article, whether an auditor’s report was submitted and published.

(5) The registration body shall enter the details referred to in points 2 and 3 of the previous paragraph of this article in the register.

(6) AJPES shall deliver to anyone upon request a copy of an annual report or a consolidated annual report, together with the auditor’s opinion, submitted in accordance with the first paragraph of this article, or a copy of an annual report submitted in accordance with the second paragraph of this article on payment of the fee laid down in the tariff of AJPES. AJPES must deliver copies referred to in the preceding sentence to the extent (in full or in parts) and in the form (electronic or written), as stated in the request. The copy in the written form must be marked as “exact copy”, while that in the electronic form shall be subject to the provisions of the act governing electronic commerce and electronic signature.

(7) In every publication of a full annual report or consolidated annual report the report must be published in the form and with the text that served as the basis for the auditing thereof. The full text of the auditor’s opinion, including an explanation of a qualified opinion and a disclaimer of opinion, shall also be published. If the statements or the report have not been examined by an auditor this must be stated in the publication.

(8) In every publication of a summary of an annual report or consolidated annual report it must be stated that it is a summary. The publication of the summary must state the date on which the annual report or consolidated annual report under the first or second paragraph of this article was submitted and the date and method of publication under the third paragraph of this article. If these reports have not yet been submitted in accordance with the first or second paragraph of this article this must be stated in the publication. The publication of a summary shall not include the full text of the auditor’s report but shall disclose only the auditor’s opinion and the explanatory paragraph, if any. However, the publication of the summary may include the auditor’s report on the summary.

(9) If, in accordance with the law regulating auditing, the auditor has declined to express an opinion, this shall be explicitly stated in the publication referred to in the seventh and eighth paragraph of this article.

(10) For publication under the third paragraph of this article, companies and entrepreneurs shall pay to AJPES the fee laid down in the tariff of AJPES at the same time as submitting the reports referred to in the first or second paragraph of this article.

(11) The tariff setting the fees referred to in the sixth and tenth paragraphs of this article shall be adopted by AJPES with the agreement of the ministers with responsibility for economy and justice. The fees may not be higher than the actual costs related to the capturing of reports in computerised form and the maintenance of a website intended for publication of annual reports, or the costs related to producing copies of the reports.

(12) In accordance with a prior opinion received from AJPES, the ministers with responsibility for economy and justice shall prescribe detailed rules on:

1. the method of submitting reports under the first or second paragraph of this article;

2. the method of publication under the third paragraph of this article and the design of the website referred to in the third paragraph of this article;

3. the method of notifying the registration body under the fourth paragraph of this article.

Article 59

Forwarding Data from Annual Reports

(1) Companies and entrepreneurs, save for entrepreneurs subject to tax on the basis of the established profit with the consideration of normed costs under the provisions on the tax on income from business activities of the act regulating income tax, must, within three months after the end of a calendar year, submit to AJPES the data from annual reports on their property and financial operation and profit and loss account for the national statistics and other purposes of recording, analyses, information, research and tax.

(2) The companies and entrepreneurs referred to in the second paragraph of the preceding article whose financial year corresponds to calendar year, may fulfil the obligation eferred to in the second paragraph of the preceding article by indicating upon submitting the data in accordance with the preceding paragraph that the data from annual reports shall be used also for publication.

(3) AJPES may use the data from annual reports on property and financial operation and operating results of companies and entrepreneurs solely for the production of consolidated information on economic trends. The data on individual companies and entrepreneurs may not be forwarded to other persons or published.

(4) AJPES must automatically submit the data which, according to the act regulating tax procedure, are part of tax account, to the Tax Administration of the Republic of Slovenia within the deadline and according to the method prescribed by the minister responsible for finance. It shall be deemed that the companies and the entrepreneurs submitted part of the tax account.

(5) Notwithstanding the third paragraph hereunder, AJPES must forward the data from annual reports on property and financial operation and profit and loss account of companies and entrepreneurs in an appropriate electronic form to state agencies and legal persons legally authorised to collect and apply these data for the purpose of recording, analysis and information and research. The mentioned organisation must forward these data to state agencies, the Bank of Slovenia and members of the Economic and social Council free of charge, while it shall forward them to legal persons against the payment of the actual costs of processing or forwarding of the data.

Section 2

GENERAL RULES ON THE ANNUAL REPORT

Article 60

Annual report

(1) The annual report of companies referred to in the first paragraph of Article 57 hereof must contain:

• balance sheet,

• profit and loss statement,

• cash flow statement,

• capital flow statement,

• annexes with notes to financial statements, and

• business report referred to in Article 70 of this Act.

The accounting statements from points one to four hereunder and the annex with notes to accounting statements shall form an accounting report.

(2) The annual report of small companies with share capital whose securities are not traded on the regulated market must comprise at least:

• balance sheet, profit and loss statement, and

• annexes with notes to financial statements.

(3) The annual report of companies and entrepreneurs referred to in the third paragraph of Article 53 hereof must contain:

• balance sheet and

• profit and loss statement.

(4) The balance sheet shall set out the balance of assets and liabilities at the end of the financial year.

(5) The profit and loss account shall set out the income, expenses and operating result in the financial year.

(6) The capital flow statement shall set out changes in the individual elements of capital in the financial year, including the use of net profit and the covering of losses.

(7) The cash flow statement shall set out changes in receipts and disbursements, or inflows and outflows, in the financial year and explain changes in the balance of cash.

(8) If existing, the auditor’s report, the proposal for distribution of the balance sheet profit and the report on relations with the parent company shall be attached to the annual report but shall not be its constituent parts.

Article 61

General rule

(1) The annual report must be drawn up clearly and transparently. It must provide a true and fair presentation of the assets and liabilities of the company, its financial position and profit and loss account.

(2) If the application of Articles 62 to 70 of this Act and of the Slovenian Accounting Standards is not sufficient to provide a true and fair presentation under the first paragraph of this article, appropriate explanations must be provided in a supplement to the financial statements.

(3) If in exceptional cases owing to the application of a particular provision contained in Articles 62 to 70 of this Act it is not possible to fulfil the obligation under the first paragraph of this article, that provision shall not be applied if a true and fair presentation as referred to in the first paragraph of this article can be achieved without its application.

In this case the reasons for not applying the particular provision shall be explained in the supplement to the financial statements and a description shall be given of what effects the application of that provision would have on the presentation of the assets and liabilities of the company, its financial position and the profit and loss account.

Article 62

General rules on the categorisation of financial statements

(1) In the financial statements individual asset items may not be set off against individual liability items, or individual income items against individual expense items.

(2) The same method of categorisation of items must be used in the balance sheets and profit and loss accounts for consecutive financial years. It may only be changed in exceptional cases. In such case this shall be stated in the supplement containing the notes to the financial statements and the reasons for changing the method of categorising the items shall be explained.

(3) In the balance sheet and the profit and loss account the items referred to in Article 65 and Article 66 of this Act shall be shown separately and in the same order as stated in the aforementioned articles of this Act. A further categorisation of items within the individual items stipulated in Article 65 or Article 66 of this Act shall be permitted. New items may only be added if in terms of their content they do not cover the items referred to in Article 65 or Article 66 of this Act.

(4) The method of categorisation, the nomenclature and the naming of items denoted in Arabic numerals in the balance sheet or the profit and loss account may be adapted to the particular characteristics of the activity of the company. The Slovenian Accounting Standards shall lay down special rules for the adaptation referred to in the preceding sentence for companies carrying out activities in particular economic sectors, and in particular for banks and insurance companies.

(5) Items in the balance sheet or the profit and loss account denoted with Arabic numeral may be combined:

1. if the value of the individual items being combined is not important for providing a true and fair presentation referred to in the first paragraph of the previous article of this Act, or

2. if improved transparency is achieved by combining the items; in this case the combined items must be shown separately in the supplement to the financial statements.

(6) For each item in the balance sheet and profit and loss account the value of that item in the previous year must also be given. If these values are not comparable the value of the item for the previous year must be adjusted accordingly. The incomparability of the items and their adjustment must be set out in the supplement to the financial statements together with appropriate notes.

(7) Items with a value of zero do not have to be shown in the balance sheet or the profit and loss account except where necessary for reasons of comparison with the value of such items in the previous year.

Section 3

BALANCE SHEET

Article 63

Group and associated companies

(1) Group companies are companies that must be consolidated in the annual report pursuant to Article 56 hereof.

(2) An associated company is a company in the capital of which another company has a considerable influence but it is not its subsidiary.

Article 64

Reserves

(1) The following shall be shown as capital reserves (liabilities item A.II.):

1. amounts which the company obtains from payments exceeding the smallest issue amounts of the shares issued or the founding stakes (paid-up capital surplus),

2. amounts which the company obtains from the issuing of convertible bonds or bonds with a share option above the nominal value of the bonds,

3. amounts additionally paid in by members for the acquisition of additional rights arising from their shares,

4. amounts of other payments by members on the basis of the articles of association (for example, subsequent payments by members),

5. amounts based on a simplified reduction in the subscribed capital or a reduction in the subscribed capital through a withdrawal of shares.

6. amounts arising from general capital revaluation adjustments.

(2) Profit reserves (liabilities item A.III.) may only be created from the net profit for the financial year and the net profit brought forward from previous years.

Profit reserves shall be divided into:

1. statutory reserves (third paragraph of this article; liabilities item A.III.1.),

2. reserves for own share (fifth paragraph of this article; liabilities item A.III.2.),

3. Own shares (as deductible item A.III.3).

4. reserves under articles of association (seventh paragraph of this article; liabilities item A.III.4.),

5. other profit reserves (ninth paragraph of this article; liabilities item A.III.5.).

(3) Companies must create statutory reserves in an amount such that the sum total of statutory reserves and capital reserves under points 1 to 3 of the first paragraph of this article equals 10 per cent, or a higher percentage of the subscribed capital determined in the articles of association.

(4) If the statutory and capital reserves under points 1 to 3 of the first paragraph of this article combined do not reach the share of the subscribed capital referred to in the third paragraph of this article and the company discloses a net profit for the financial year, in the balance sheet for that financial year it must allocate to the statutory reserves 5 per cent of the net profit, reduced by the amount used to cover any loss brought forward, until the statutory and capital reserves under points 1 to 3 of the first paragraph of this article combined reach the share referred to in the third paragraph of this article.

(5) If the company has acquired own share in the financial year, in the balance sheet for that financial year it must create reserves for own share in the amount of the sums paid for the acquisition of own share. Notwithstanding the first sentence of the second paragraph of this article, reserves for own share may also be created:

1. from reserves under the articles of association if the articles of association provide that they may be used for this purpose,

2. from the amount of the other profit reserves exceeding any loss brought forward which could not be covered from the net profit for the financial year.

(6) Reserves for own share must be released and may only be released if the own share is disposed of or withdrawn.

(7) The articles of association may provide that a company has reserves under the articles of association in addition to statutory reserves. In this case the articles of association must also determine:

1. the amount of the reserves under the articles of association, either in the absolute amount or as a share of the subscribed capital or the total capital,

2. the share of the net profit, reduced by any amounts used to cover a loss brought forward, and the creation of statutory reserves and profit reserves allocated in a particular financial year for the creation of reserves under the articles of association,

3. the purposes for which reserves under the articles of association may be used.

(8) Reserves under the articles of association may be used only for purposes set out in the articles of association.

(9) Other profit reserves may be used for any purpose other than in the case referred to in the fifth paragraph of this article or where otherwise provided by the articles of association.

(10) Capital reserves and statutory reserves (time reserves) may only be used under thefollowing conditions:

1. if the total amount of these reserves does not reach the percentage of the subscribed capital determined by law or the articles of association, they may only be used:

– to cover a net loss for the financial year if it cannot be covered from a net profit brought forward or from other profit reserves,

– to cover a loss brought forward if it cannot be covered from a net profit for the financial year or from other profit reserves;

2. if the total amount of these reserves exceeds the percentage of the subscribed capital determined by law or the articles of association, the surplus amount of these reserves may be used:

• to increase in the subscribed capital from the company’s assets,

– to cover a net loss for the financial year if it cannot be covered from a net profit brought forward, provided that profit reserves are not simultaneously used for a payout of profit to the members, and

– to cover a net loss brought forward if it cannot be covered from a net profit for the financial year, provided that profit reserves are not simultaneously used for a payout of profit to the members.

(11) The use of the net profit for a particular financial year for the following purposes:

1. to cover a loss brought forward,

2. to create statutory reserves under the fourth paragraph of this article,

3. to create reserves for own share under the fifth paragraph of this article,

4. to create reserves under the articles of association in the case referred to in the seventh paragraph of this article, and

5. to create other profit reserves in the case referred to in the third or fourth paragraph of Article 230 of this Act, shall be taken into account in the balance sheet for that financial year.

(12) Under the capital reserves item the following shall be shown separately either in the balance sheet or in the supplement to the financial statements:

1. the amount written up in the financial year,

2. the amount written down in the financial year.

(13) Under each of the profit reserves items the following shall be shown separately either in the balance sheet or in the supplement to the financial statements:

1. amounts allocated to the reserves from the profit for appropriation for the previous financial year in accordance with the general meeting resolution on the use of the profit for appropriation for the previous financial year,

2. amounts allocated to the reserves from the net profit for the financial year,

3. the amount by which the reserves were reduced owing to use in the financial year.

(14) When a company compiles a capital flow statement the details referred to in the twelfth and thirteenth paragraphs of this article shall be shown in the capital flow statement instead of in the balance sheet or supplement to the financial statements.

Article 65

Balance sheet categorisation

(1) Companies shall categorise their balance sheets as follows:

FUNDS

A. Non-current assets

I. Intangible assets and long-term deferred items

1. Long-term property rights

2. Goodwill

3. Advances for intangible assets

4. Long-term deferred development expenses

5. Other long-term deferred items

II. Tangible fixed assets

1. Land and buildings

a) Land

b) Buildings

2. Production machinery

3. Other devices and equipment

4. Tangible fixed assets under construction or manufacturing

a) Tangible fixed assets under construction or in production

b) Advances for acquisition of tangible fixed assets

III. Investment property

IV. Long-term financial investments

1. Long-term financial investments, except for loans

a) Shares and stakes in the group

b) Shares and stakes of associated companies

c) Other shares and stakes

č) Other long-term investments

2. Long-term loans

a) Long-term loans to members of the group

b) Long-term granted loans to others

c) Long-term subscribed equity capital unpaid

V. Long-term operating receivables

1. Long-term operating receivables from members of the group

2. Long-term accounts receivable

3. Other long-term operating receivables

VI. Deferred tax assets

B. Current assets

I. Assets (or disposal groups) classified as held for sale

II. Inventories

1. Material

2. Work in progress

3. Products and merchandise

4. Advances for inventories

III. Short-term financial investments

1. Short-term financial investments, except for loans

a) Shares and stakes in the group

b) Other shares and stakes

c) Other short-term financial investments

2. Short-term loans

a) Short-term loans to members of the group

b) Short-term granted loans to others

c) Short-term subscribed equity capital unpaid

IV. Short-term operating receivables

1. Short-term operating receivables from members of the group

2. Short-term accounts receivable

3. Short-term operating receivables from others

V. Cash

C. Short-term deferred items

TOTAL ASSETS

LIABILITIES

A. Capital

I. Called-up capital

1. Subscribed capital

2. Uncalled capital (deduction item)

II. Capital reserves

III. Profit reserves

1. Statutory reserves

2. Reserves for own shares and stakes

3. Own shares and own stakes(as deductible item).

4. Statutory reserves

5. Other reserves from profit

IV. Revaluation surplus

V. Net profit/loss brought forward

VI. Net profit or loss in the accounting period

B. Provisions and long-term accrued items

1. Provisions for pensions and similar liabilities

2. Other provisions

3. Long-term accrued items

C. Long-term liabilities

I. Long-term financial liabilities

1. Long-term financial liabilities to companies in the group

2. Long-term financial liabilities to banks

3. Long-term liabilities arising from bonds

4. Other long-term financial liabilities

II. Long-term operating liabilities

1. Long-term operating liabilities from members of the group

2. Long-term operating liabilities to suppliers

3. Long-term liabilities arising from bills of exchange

4. Long-term operating liabilities arising from advances

5. Other long-term operating liabilities

III. Deferred tax liability

Č. Short-term liabilities

I. Liabilities included in disposal groups

II. Short-term financial liabilities

1. Short-term financial liabilities to companies in the group

2. Short-term financial liabilities to banks

3. Short-term financial liabilities arising from bonds

4. Other short-term financial liabilities

III. Short-term operating liabilities

1. Short-term operating liabilities to companies in the group

2. Short-term operating liabilities to suppliers

3. Short-term liabilities arising from bills of exchange

4. Short-term operating liabilities arising from advances

5. Other short-term operating liabilities

D. Short-term accrued items

TOTAL LIABILITIES

(2) Medium-sized companies must compile a balance sheet in accordance with the previous paragraph. In the published balance sheet it shall be sufficient for the balance sheet to be categorised only into the following items:

ASSETS

A. Non-current assets

I. Intangible assets and long-term deferred items

1. Intangible assets

2. Long-term deferred items

II. Tangible fixed assets

1. Land and buildings

a) Land

b) Buildings

2. Production machinery

3. Other devices and equipment

4. Advances for acquisition of tangible fixed assets and tangible fixed assets under construction and in production

III. Investment property

IV. Long-term financial investments

1. Long-term financial investments, except for loans

a) Shares and stakes in the group

b) Other long-term financial investments

2. Long-term loans

a) Long-term loans to members of the group

b) Other long-term loans

V. Long-term operating receivables

1. Long-term operating receivables from members of the group

2. Other long-term operating receivables

VI. Deferred tax assets

B. Current assets

I. Assets (or disposal groups) classified as held for sale

II. Inventories

III. Short-term financial investments

1. Short-term financial investments, except for loans

a) Shares and stakes in the group

b) Other short-term financial investments

2. Short-term loans

a) Short-term loans to members of the group

b) Other short-term loans

V. Short-term operating receivables

1. Short-term operating receivables from members of the group

2. Short-term operating receivables from others

V. Cash

C. Short-term deferred items

TOTAL ASSETS

LIABILITIES

A. Capital

I. Called-up capital

1. Subscribed capital

2. Uncalled capital (deduction item)

II. Capital reserves

III. Profit reserves

1. Statutory reserves

2. Reserves for own shares and stakes

3. Own shares and own stakes(as deductible item).

4. Statutory reserves

5. Other reserves from profit

IV. Revaluation surplus

V. Net profit/loss brought forward

VI. Net profit or loss in the accounting period

B. Provisions and long-term accrued items

1. Provisions

2. Long-term accrued items

C. Long-term liabilities

I. Long-term financial liabilities

1. Long-term financial liabilities to companies in the group

2. Long-term financial liabilities to banks

3. Other long-term financial liabilities

II. Long-term operating liabilities

1. Long-term operating liabilities from members of the group

2. Long-term operating liabilities to suppliers

3. Other long-term operating liabilities

III. Deferred tax liability

Č. Short-term liabilities;

I. Liabilities included in disposal groups

II. Short-term financial liabilities

1. Short-term financial liabilities to companies in the group

2. Short-term liabilities to banks

3. Other short-term financial liabilities

III. Short-term operating liabilities

1. Short-term operating liabilities to companies in the group

2. Short-term operating liabilities to suppliers

3. Other short-term operating liabilities

D. Short-term accrued items

LIABILITIES

(3) Small companies shall categorise and publish their balance sheets as follows:

ASSETS

A. Non-current assets

I. Intangible assets and long-term deferred items

1. Intangible assets

2. Long-term deferred items

II. Tangible fixed assets

III. Investment property

IV. Long-term financial investments

1. Long-term financial investments, except for loans

2. Long-term loans

V. Long-term operating receivables

VI. Deferred tax assets

B. Current assets

I. Assets (or disposal groups) classified as held for sale

II. Inventories

III. Short-term financial investments

1. Short-term financial investments, except for loans

2. Short-term loans

IV. Short-term operating receivables

V. Cash

C. Short-term deferred items

TOTAL ASSETS

LIABILITIES

A. Capital

I. Called-up capital

1. Subscribed capital

2. Uncalled capital (deduction item)

II. Capital reserves

III. Profit reserves

IV. Revaluation surplus

V. Net profit/loss brought forward

VI. Net profit or loss in the accounting period

B. Provisions and long-term accrued items

1. Provisions

2. Long-term accrued items

C. Long-term liabilities

I. Long-term financial liabilities

II. Long-term operating liabilities

III. Deferred tax liability

Č. Short-term liabilities;

I. Liabilities included in disposal groups

II. Short-term financial liabilities

III. Short-term operating liabilities

D. Short-term accrued items

LIABILITIES

(4) Under the items referring to companies in the group, all relationships with such companies must be disclosed and under other items all the relationships but those referring to the companies in the group.

(5) Liabilities from sureties and other guarantees not shown as liabilities in the balance sheet shall be shown as off-balance sheet contingent liabilities. These contingent liabilities shall be categorised by type of guarantee, with any material guarantees specifically stated. Liabilities for sureties and other guarantees to companies in the group shall be shown separately.

(6) If a particular asset or liability falls under more than one item in the categorisation this must be explained where necessary for purposes of clarity and transparency of the annual report, either in the item under which it is shown or in the supplement to the financial statements. Own shares and shares in companies in the group may only be shown under the items envisaged for their disclosure.

Section 4

PROFIT AND LOSS ACCOUNT

Article 66

Profit and loss account categorisation

(1) Companies may categorise their profit and loss account in accordance with either the second or third paragraph of this article.

(2)

1. Net sales income

2. Changes in inventories of finished goods and work-in-progress

3. Capitalised own goods and own services

4. Other operating revenue (including revaluatory operating income)

5. Costs of Goods, Material and Services

a) Cost of goods and materials sold and costs of materials used

b) Cost of services

6. Labour costs

a) Cost of wages and salaries

b) Social insurance cost (separate disclosure of retirement insurance cost)

c) Other labour costs

7. Write-downs

a) Depreciation

b) Revaluatory operating expenses of intangible and tangible fixed assets

c) Revaluatory operating expenses associated with operating current assets

8. Other operating expenses

9. Financial income from participations

a) Financial income from stakes in the companies of the group

b) Financial income from stakes in associated companies

c) Financial income from stakes in other companies

č) Financial income from other companies

10. Financial income from granted loans

a) Financial income from loans granted to the companies of the group

b) Financial income from loans granted to others

11. Financial income from operating receivables

a) Financial income from operating receivables from the companies of the group

b) Financial income from operating receivables from receivables

12. Financial expenses for impairments and write-offs of financial investments

13. Financial expenses for financial liabilities

a) Financial expenses for loans received from the companies of the group

a) Financial expenses for loans received from banks

c) Financial expenses for issued bonds

c) Financial expenses for other financial liabilities

14. Financial expenses for operating liabilities

a) Financial expenses for operating liabilities to the companies of the group

b) Financial expenses for liabilities to suppliers and bill of exchange liabilities

c) Financial expenses for other operating liabilities

15. Other income

16. Other expenses

17. Corporate income tax

18. Deferred taxes

19. Net profit or loss for the accounting period (1+-2+3+4–5–6–7-8+9+10+11–12–13–14+15–16–17+-18)

(3)

1. Net sales income

2. Production costs of goods sold (including depreciation and amortization) and/or cost of goods sold

3. Gross profit or loss from sales (1-2)

4. Selling costs (including depreciation and amortization)

5. General and administrative costs (including depreciation and amortization)

a) Costs of general activities

b) Operating expenses from revaluation of intangible and tangible fixed assets

c) Revaluatory operating expenses associated with operating current assets

6. Other operating income (including revaluatory operating revenues)

Items 7 to 17 shall be categorised in the same way as items 9 to 19 under the second paragraph of this article.

(4) Medium-sized companies may combine items 1 to 5 under the second paragraph of this article and items 1 to 3 and item 6 under the previous paragraph of this article into the single item “Pre-tax profit/loss”.

(5) In the second paragraph hereunder, the following items shall also be disclosed after Item 19:

20. Profit/loss brought forward

21. Reduced (released) equity reserves

22. Reduced (released) profit reserves by individual types of reserves

23. Increased (additionally established) profit reserves separately by individual types of reserves

24. Profit/loss for appropriation (as the sum of net profit/loss and the corresponding items 20, 22 and 23).

In the third paragraph hereunder, the following items of the previous sentence shall also be disclosed as Items 18 to 22:

(6) The details referred to in the sixth paragraph of this article may be shown in the supplement to the financial statements instead of in the profit and loss account.

(7) When a company compiles a capital flow statement the details referred to in the fifth paragraph of this article shall be shown in the capital flow statement instead of in the balance sheet or supplement to the financial statements.

Section 5

VALUATION OF ITEMS IN THE FINANCIAL STATEMENTS

Article 67

General rules of valuation

(1) The following general rules shall apply to the valuation of items in the annual financial statements:

1. the company is presumed to operate as a going concern;

2. the use of valuation methods may not change without good reason from one financial year to the next (consistency of valuation);

3. the principle of caution shall be applied in the manner determined by the Slovenian Accounting Standards or the International Financial Reporting Standards;

4. the principle of fair value shall be applied in the manner determined by the Slovenian Accounting Standards or the International Financial Reporting Standards;

5. expenses and income shall be taken into account irrespective of when they were paid or received;

6. the components of assets and liabilities shall be valued individually;

7. the opening balance sheet for the financial year must correspond with the closing balance sheet for the previous financial year.

(2) The general rules laid down in the first paragraph of this article may only be disregarded in exceptional cases determined in the Slovenian Accounting Standards or the International Financial Accounting Standards. In such cases the reasons for disregarding the general rules must be explained in the supplement to the financial statements, and the effects this has on the presentation of the company’s assets and liabilities, its financial position and operating result must be described.

Section 6

ANNUAL REPORT AND VALUATION RULES IN THE CASE OF MERGERS AND DIVISIONS

Article 68

Concluding report of acquired or transferring companies; valuation after a merger or division

(1) A company being acquired or a transferring company must draw up a concluding report as at the accounting date of the merger or division. The provisions of Articles 53 to 57, 60 to 67 and 69 of this Act shall apply mutatis mutandis to the concluding report. The accounting date of the merger or division (balance sheet date of the concluding report) may be a maximum of nine months prior to the submission of the proposal for entry of the merger or division in the register.

(2) Assets and liabilities which transfer to the acquiring company on the basis of the merger or division shall be valued by the acquiring company in accordance with the Slovenian Accounting Standards or the International Financial Accounting Standards.

Section 7

NOTES ON THE ACCOUNTS

Article 69

Contents of the notes on the accounts

(1) In addition to the data and explanations which must be included in the notes on the accounts under the provisions of the other articles of this chapter and in accordance with the Slovenian Accounting Standards and the International Financial Accounting Standards, the supplement to the financial statements shall also state:

1. the methods used to value the individual items in the annual financial statements and the methods used to calculate value adjustments. For items originally expressed in a foreign currency the exchange rate and the method used to convert them into the domestic currency shall also be stated;

2. the following details for each of the companies in which the company has a capital participation of at least 20% either directly or through a person acting on behalf of the company:

– its registered name and registered office,

– the share of its capital participation,

– the amount of its capital and its operating result in the financial year. These details need not be disclosed if they are not important for providing a true and fair presentation under the first paragraph of Article 61 of this Act. In connection with a company that does not publish an annual report and in which the company has a direct or indirect capital participation of less than 50%, the amount of its capital and its operating resultneed not be disclosed;

3. If the company is a member in another company and is personally liable without limitation for the obligations of this company: the registered name, registered office and organisational form of this other company. These details need not be disclosed if they are not important for providing a true and fair presentation under the first paragraph of Article 61 of this Act;

4. If the company has authorised capital or has conditionally increased the subscribed capital: the amount of the authorised capital and the smallest issue amount of the shares issued in the financial year for the authorised capital or on the basis of the conditional increase in the subscribed capital;

5. If the company holds own share or held own share during the year:

– the number, amount and value of own share in the subscribed capital of the company which the company, or a third party on behalf of the company, acquired or disposed of in the financial year, the date of its acquisition, the reason for the acquisition or disposal of the own share and the cash value of the corresponding contribution;

– the number, amount and value of own share in the subscribed capital of the company which the company, or a third party on behalf of the company, received in pledge in the financial year;

– the total number, amount and value of own share in the subscribed capital of the company held as pledge by the company or a third party on behalf of the company as at the balance sheet date;

6. If the company has issued more than one class of shares: the number shares in each class and their smallest issue amount;

7. If the company has issued dividend bonds, convertible bonds, bonds with a priority right to buy shares or other securities giving the holder the right to participate in the profit of the company or the right to buy or to convert into shares in the company for each of these types of securities: their number and the rights arising from them;

8. A categorisation and explanation of the amounts of the provisions shown under the item Other provisions if the amount of these provisions is significant;

9. The amount of all liabilities maturing in more than five years, separately for each liabilities item under the first, second, third or fifth paragraph of Article 65 of this Act;

10. The amount of all the liabilities backed by a material guarantee (liens and similar rights), with details of the form and method of ensuring the material guarantee, separately for each liabilities item under the first, second, third or fifth paragraph of Article 65 of this Act;

11. The total amount of financial liabilities not disclosed in the balance sheet if this data is important for assessing the financial position of the company. Liabilities from payments of pensions and liabilities to companies in the group must be shown separately;

12. A categorisation of net sales revenues by individual area of the company’s operations or by individual geographical market, if, in terms of the organisation of sales of products characteristic of the continuing operations or the provision of services characteristic of the continuing operations of the company, the individual areas of operation of the company or the individual geographical markets in which the company operates differ significantly from each other. The details referred to in the preceding sentence need not be disclosed if such disclosure could cause significant damage to the company; nevertheless the supplement to the financial statements must state that the details referred to in the first sentence of this point were not disclosed for the aforementioned reasons;

13. The average number of employees in the financial year, categorised by education;

14. If a categorisation of the profit and loss account under the third paragraph of Article 66 of this Act was used: the amount of the labour costs in the financial year under point 6 of the second paragraph of Article 66 of this Act;

15. Breakdown of capital reserves in accordance with the first paragraph of Article 64 hereof;

16. The total amount of income received for performing tasks in the company in the financial year by members of the management, other employees of the company based on a contract for which the tariff part of the collective agreement does not apply, and the members of the supervisory board, separately for each of these groups of persons.

17. Advances and loans approved by the company or its subsidiary for members of the management, supervisory board, other employees of the company, those working on the basis of a contract for which the tariff part of the collective agreement does not apply, and the guarantees issued by the company for the obligations of such persons, with the following details shown separately for each of these groups of persons:

– the total amount of advances or outstanding loans or guarantees issued,

– the interest rate and other important terms and conditions of a loan,

– the total amount of loan repayments in the financial year,

18. The registered name and registered offices of a dominant company which compiles a consolidated annual report for the widest circle of companies in the group and in relation to which the company is a dependent company, and the place where the consolidated annual report can be obtained.

19. The registered name and registered offices of a dominant company which compiles a consolidated annual report for the narrowest circle of companies in the group and in relation to which the company is a dependent company, and the place where the consolidated annual report can be obtained.

20. If the company is subject to auditing pursuant to Article 57 of this Act: the entire amount spent for the auditor and separately the amount spent for:

• the auditing of the annual report,

• other auditing services,

• tax consultancy services, and

• other services not related to auditing.

(2) A company may choose not to disclose details on an individual company under point 2 or point 3 of the first paragraph of this article if such disclosure could cause appreciable damage to that company. In such cases the supplement to the financial statements must state that such details were not disclosed for the aforementioned reasons.

(3) Small companies need not disclose or explain in the supplement to the financial statements the following:

– the details referred to in points 7 to 20 of the first paragraph of this article, and

– the details referred to in the second sentence of the fourth paragraph of Article 66 of this Act; however, they must present the details referred to in points 9 and 10 of the first paragraph of this article in total for all liabilities items.

(4) Medium-sized companies need not disclose or explain in the supplement to the financial statements the details referred to in point 12 of the first paragraph of this article.

In the publication of the business report they may also omit the following:

– the details referred to in points 7, 9 and 10 of the first paragraph of this article, and

– the details referred to in the second sentence of the fourth paragraph of Article 66 of this Act; however, they must present the details referred to in points 9 and 10 of the first paragraph of this article in total for all liabilities items.

Section 8

BUSINESS REPORT

Article 70

Business report

(1) The business report must set out at least a fair presentation of the development and results of the company’s operations and its financial position, including the description of essential risks and uncertainties the company is exposed to.

(2) A fair presentation must be a balanced and comprehensive analysis of development and operating results of the company and its financial position corresponding to the extent and the complexity of its operation. To the extent necessary to understand the development and operating results of the company and its financial position, the analysis must contain the key accounting, financial and, when necessary, other indicators, ratios and other factors including also information concerning environmental protection and employees. The analysis shall include the appropriate reference to the sums provided in financial statements and necessary additional clarifications.

(3) The business report must also set out:

• important business developments since the end of the financial year,

• the expected development of the company,

• the company’s research and development activities,

• the company’s branches,

(4) When necessary for the assessment of the property and liabilities of the company, its financial position and operating results, the business report must set out also the aims and measures of management of financial risks of the company, including the measures for protecting all major types of planned transactions, for which the insurance transactions are set out separately in terms of accounting, and the exposure of the company to the price, credit, liquidity risks and risks related to the cash flow.

(5) The business report shall also contain the statement on the management of the company together with the statement whether the company uses any codes for its operations and if yes, the indication of such code, its public availability and indication of individual stipulations of such code which the company has not complied with, with appropriate justification.

(6) The business report of companies obliged to apply the act regulating acquisitions must also contain the data on the balance as at the last day of the business year and all the necessary explanations about:

1. The structure of the company’s subscribed capital including all securities, as stipulated by the act regulating acquisitions (hereinafter; securities) of a company which have not been admitted to the regulated market of securities, and especially an indication of:

• the rights and obligations arising from the shares or the shares of individual classes, and

• if there are several classes of shares, the share of subscribed capital in individual class;

2. All the restrictions related to the transfer of shares, in particular:

• the restrictions of securities holdership, and

• the need to obtain authorisation of the company or any other holders of securities for the transfer of shares;

3. Significant direct and indirect holdership of the company’s securities in the sense of achieving a qualified stake, as stipulated by the act regulating acquisitions, namely:

• name and surname or company name of the holder,

• the number of securities and stake represented in the company’s subscribed capital, and

• the nature of holdership.

A person shall be deemed indirect holder of securities if these are held for such person’s behalf by another person or if they can assure that the rights arising from them are exercised in accordance with their will;

4. Each holder of securities that carry special control rights:

• name and surname or company name of the holder, and

• the nature of the rights;

5. The employee share scheme, if existing, of shares to which it relates and about the method of exercising control over such scheme, if control is not exercised directly by the employees;

6. All the restrictions related to voting rights, in particular:

• restrictions of voting rights to a certain stake or a certain number of votes,

• deadlines for exercising the voting rights; and

• agreements in which, on the basis of the company’s co-operation, the financial rights arising from securities are separated from the rights arising from the holdership of such securities;

7. All agreements among shareholders known to the company that could result in the restriction of the transfer of securities or voting rights;

8. The company’s rules on:

• appointment or replacement of members of the management or supervisory bodies, and

– changes to the articles of association;

9. authorisations of the members of the management, especially on the basis of authorisations for issuing or purchasing own shares;

10. All important agreements in which the company is a party and which take effect, change or are cancelled on the basis of the change in the control over the company as a result of a bid, as stipulated by the act regulating acquisitions, and the effects of such agreements. This shall not be necessary if the disclosure of such agreement could cause significant damage to the company, unless the company is obliged to disclose such agreements pursuant to other regulations;

11. All agreements between the company and the members of its management or supervision bodies or the employees which foresee compensation should such persons, due to a bid as stipulated by the act regulating acquisitions:

• resign,

• be fired without cause, or

• their employment relationship be terminated.

PART II

ENTREPRENEURS

Article 71

Application of the provisions of this Act to entrepreneurs

The following provisions of this Act shall apply mutatis mutandis to entrepreneurs:

– on activity (Article 6);

– on registered names (Articles 12 to 23);

– on registered office (Articles 29 and 30);

– on branches (Article 31);

– on procuration (Articles 33 to 37) and

– on business secrets (Articles 39 and 40).

Article 72

Special provisions on entrepreneurs

(1) The registered name of an entrepreneur shall contain the full name of the entrepreneur, the abbreviation “s.p.” denoting an entrepreneur, a designation of the activity and any additional elements.

(2) An entrepreneur may also use an abbreviated registered name containing at least his full name and the designation s.p.

(3) If the entrepreneur sells the undertaking or invests it in a company, the buyer or the company may continue to use in the registered name the full name of the entrepreneur only with that person’s explicit permission.

(4) If an entrepreneur dies an inheritor of the entrepreneur who continues the legator’s undertaking may continue to use the full name of the legator in the registered name. With the continuation of the legator’s company, the company and the rights and obligations of the entrepreneur in respect of the company shall be transferred to the entrepreneur’s inheritor. The entrepreneur’s inheritor shall, as the universal legal successor, enter into all business relationships in connection with the transferred company and shall be entered as entrepreneur in accordance with Article 74 hereunder.

(5) All communications sent by the entrepreneur to individual addressees must contain an indication of the registered name and registered office of the entrepreneur and its company ID number.

(6) On communications sent as part of existing business contacts it shall only be necessary to state the registered name and the registered office. Order forms shall be deemed to be communications within the meaning of the preceding paragraph.

(7) A procuration shall not cease upon the death or loss of legal capacity of the entrepreneur.

(8) An entrepreneur may appoint a representative for the event of death who shall be authorised to carry out all legal activities in the scope of the entrepreneur’s regular activities as of the moment of the entrepreneur’s death. Such authorisation may be revoked at any time by the entrepreneur’s inheritor. Issue and revocation of such authorisation must be entered in the Business Register of Slovenia.

Article 73

Keeping the books of account

(1) The method of keeping books of account and compiling financial statements for an entrepreneur whose undertaking meets the criteria for classification as a small company shall be regulated by a special Slovenian Accounting Standard.

(2) The third paragraph of Article 54 of this Act notwithstanding, an entrepreneur may keep books of account according to the single-entry book-keeping system in accordance with the special standard referred to in the first paragraph of this article provided he meets at least two of the following criteria in the last business year:

– the average number of employees does not exceed three,

– annual revenues are less than 42,000 euros,

– the average value of assets calculated as half the sum of the asset value on the first day and last day of the business year does not exceed 25,000 euros. This also applies to an entrepreneur who starts carrying out an activity and does not employ more than three employees, on average, in the first year.

(3) Pursuant to the criteria of the previous paragraph, the system of keeping the books of account of an entrepreneur shall be determined on the basis of the data from the last annual report.

(4) Notwithstanding the previous paragraphs, an entrepreneur need not keep the books of account or compile an annual report if they meet the following conditions:

• on income from activities,

• on employees, and

• on the method of determining the tax base in the past, which are stipulated by the act regulating income tax for those taxable persons obliged to pay tax on income from business activities who are entitled to account for normed costs when establishing the tax base. This also applies to an entrepreneur who starts carrying out an activity and does not employ employees in the first year.

(5) The method according to which the entrepreneur referred to in the previous paragraph shall conduct operations shall be stipulated by the act regulating tax procedure.

Article 74

Registration

(1) An entrepreneur may take up and pursue its activity when it is entered in the Business Register of Slovenia kept by AJPES.

(2) The application for the registration in the Business Register of Slovenia shall contain:

• proposed date of entry which cannot be earlier than the date of filing the application for registration and not longer than three months from the date of filing,

– the registered name of the entrepreneur and details of the registered office;

• data on abbreviated firm, if existing,

– the full name of the entrepreneur and his address; name and surname, UPIN, address, tax number,

• the data on the representative: name and surname, UPIN, address, tax number,

– a description of the activity which the entrepreneur intends to pursue.

• information on other parts of the entrepreneur as units of business register pursuant to the act governing the Business Register of Slovenia, and

• the statement of the entrepreneur of no outstanding non-matured liabilities from his/her previous operations.

(3) AJPES shall have a free direct access to and the possibility of acquisition of data from the Central Register of Population and other public registers and records for the needs of keeping data on the entrepreneurs in the Business Register of Slovenia.

(4) The method and the procedure for keeping the records on entrepreneurs in the Business Register of Slovenia shall be prescribed by the minister with responsibility for economy.

Article 75

Change and winding up

(1) An entrepreneur shall report any change of data referred to in the second paragraph of the previous article of this Act to AJPES within 15 days after the onset of the change. The entrepreneur or the person authorised by the entrepreneur shall report the winding up of operations at least 15 days in advance.

(2) At least three months before reporting the winding up of operations an entrepreneur must announce by suitable method (in letters to creditors, through the media, at the business premises) his/her intention to wind up operations and at the same time state the date on which operations will be wound up.

(3) AJPES shall, ex officio, delete the entrepreneur from the Business Register of Slovenia if the entrepreneur undergoes status changes and becomes a company with share capital, if the entrepreneur, for two consecutive years, fails to submit the annual reports and on the basis of a notification of the competent body that a final decision has been issued:

• establishing the death of the entrepreneur if the legator’s undertaking is not continued by the entrepreneur’s inheritor in accordance with the fourth paragraph of Article 72 of this Article, of which the inheritor must inform AJPES within three months of the issue of the final decision on inheritance,

• deciding the bankruptcy of the entrepreneur,

• expelling the entrepreneur from the Republic of Slovenia,

• prohibiting the entrepreneur to conduct the activity, as it established that the entrepreneur does not fulfil the conditions to conduct the activity or that he/she does not conduct the activity, or

• establishing that the entrepreneur made a false statement referred to in the eighth item of the second paragraph of the previous article.

(4) The method and the procedure for winding up of operations of an entrepreneur shall be prescribed by the minister with responsibility for economy.

(5) The provisions concerning winding up of activities shall apply mutatis mutandis where the entrepreneur intends to sell the undertaking or invest it in a company.

PART III

COMPANIES

Chapter 1

UNLIMITED COMPANIES

Section 1

FORMATION

Article 76

Concept

(1) An unlimited company is a company formed by two or more persons who are liable for the obligations of the company with all their assets.

(2) An unlimited company shall be formed by means of a contract concluded by the members.

Article 77

Subsidiary application of civil law

Unless otherwise provided in this Act, the rules governing a contract of members in civil law shall apply mutatis mutandis to an unlimited company.

Article 78

Application for entry in the register

(1) An application for entry in the register must also state the name, surname and address or the registered name and registered office of each member.

(2) An application must be submitted by all the members.

Section 2

LEGAL RELATIONS BETWEEN THE PARTNERS

Article 79

Contractual freedom

The legal relationship between the members shall be regulated by the contract of members.

Article 80

Contributions to a company

(1) Unless agreed otherwise, the members shall pay in equal contributions.

(2) A member may contribute money, things, rights or services to a company. The members must estimate the monetary value of a non-cash contribution by agreement.

(3) A member shall not be obliged to increase an agreed contribution or supplement a contribution reduced by loss.

Article 81

Duty to act with care

(1) A member shall be obliged to fulfil assumed obligations with the same care with which he would conduct his own affairs.

(2) A member shall be liable for damage which he causes to company either wilfully or through gross negligence.

(3) A member can file a lawsuit on their own behalf or on behalf of the company against another member who failed to meet the member’s obligations in the formation or management of the company. In this case, provisions of Article 503 shall apply mutatis mutandis.

Article 82

Reimbursement for expenses and compensation

(1) A member shall have the right to demand reimbursement from the company for expenses which he incurs in pursuit of the affairs of the company and which are necessary in view of the circumstances, and compensation for damage which he suffers directly as a result of carrying out the operations of the company or because of risks which are inseparably connected with carrying out those operations.

(2) The company must pay interest on the money used for payment under the preceding paragraph from the moment when the member incurred the costs or suffered the damage.

(3) A member may demand payment on account from the company for expenses which are essential in dealing with the company’s affairs.

(4) A member must immediately deliver to the company all benefits which he acquires from third persons for managing operations and in the process of managing operations.

Article 83

Duty to pay interest

A member who fails to pay in his monetary contribution on time, or who fails to deliver to the company on time money received for the company, or who uses the company’s money for himself without justification, or who is late in respect of any other of his contributions, shall pay penalty interest.

Article 84

Consequences of a violation of the prohibition on competition

(1) If a member violates the prohibition on competition the other members shall decide whether to pursue claims under Article 42 of this Act.

(2) The provisions laid down in Article 42 of this Act shall not prejudice the rights of members to require the dissolution of the company and to pursue other demands in accordance with this Act.

Article 85

Business conduct

(1) All members shall be entitled and obliged to conduct the business of the company.

(2) If the business conduct is transferred by the contract of members to one or more members, the other members may not conduct the business.

Article 86

Transfer of the entitlement to conduct business

(1) A member may not transfer the entitlement to conduct business to a third person where this is not permitted by the contract of members or by the other members.

(2) If the transfer of the entitlement to conduct business is permitted, the member shall be responsible only for choosing the persons to whom this entitlement is transferred.

(3) A member shall be responsible for the actions of an assistant.

(4) Pursuant to the third paragraph of Article 81 hereof, a member shall be entitled to file a lawsuit against a person to whom the entitlement to conduct business has been transferred.

Article 87

Several members conducting business

(1) If all the members or more than one of the members are entitled to conduct business, each of them shall be entitled to conduct business alone. If another member who is entitled to conduct business opposes the carrying out of a particular operation, that operation shall not be carried out.

(2) If the contract of members provides that the members who are entitled to conduct business may only conduct business jointly, the consent of all of the members shall be required for each operation, unless to delay the carrying out of an operation would present a risk.

Article 88

Failure to follow instructions and the obligation to report

(1) The contract of members may provide that the members who conduct business shall be obliged to take account of the instructions of the other members. If a member believes that in view of the circumstances the instructions are not sensible he must inform the other members of this and wait for their decision. A member may take action irrespective of instructions if to delay would present a risk and if he believes that the members would approve his decision if they were aware of the state of facts.

(2) A member who conducts business shall be obliged to provide the company with the necessary reports, to inform the company on request as to the state of operations and to submit accounts statements to it.

Article 89

Extent of entitlement to conduct business

(1) The entitlement to conduct business shall encompass all actions that are carried out regularly in the pursuit of the company’s activity.

(2) The consent of all the members shall be required for actions which exceed the framework of actions referred to in the preceding paragraph.

(3) The approval of all the members who are entitled to conduct business shall be required for the appointment of a procurator unless to delay would present a risk. A procuration may be revoked by any of the members entitled to grant it or who is entitled to participate in the granting of it.

Article 90

Withdrawal of the entitlement to conduct business

At the proposal of the other members the court may withdraw from a member the entitlement to conduct business if good reason exists, and especially in the case of a serious breach of obligations or inability to conduct business properly.

Article 91

Relinquishing the business conduct

(1) A member may only relinquish the business conduct if good reason exists. This right cannot be waived.

(2) The business conduct may only be relinquished in such manner that the members are able to do everything necessary for continuing to conduct business unless a good reason exists for relinquishment at an inappropriate time. If no such reason exists and a member relinquishes the business conduct at an inappropriate time he must reimburse the company for any damage which results.

Article 92

Right of inspection

(1) All members, including those not entitled to conduct business, may examine the company’s affairs and shall have the right to inspect the company’s books and documents.

(2) If a member believes with good reason that business is being conducted dishonestly, he may exercise the right under the first paragraph of this article even if the contract of members excludes or restricts it.

Article 93

Decision-making by the members

Members who are entitled to conduct business shall take decisions unanimously unless the contract of members determines that a majority is sufficient; in the case of doubt a majority shall be calculated according to the number of members.

Article 94

Annual financial statement

(1) At the end of each financial year the profit or loss shall be established on the basis of the annual financial statements and the share of each member in the profit or loss shall be calculated.

(2) The profit accruing to a member shall be added to his capital share; the calculated share of a member in any loss and money which he has withdrawn during the course of the financial year shall be deducted from the capital share.

Article 95

Division of profit and loss

(1) Each member shall initially be allocated a share of the profit in the amount of 5 per cent of his capital share. If the profit does not allow for this, the interests shall be reduced accordingly.

(2) In the calculation of the share of profit accruing to a member in accordance with the preceding paragraph, the payments which a member paid in during the financial year as contributions shall be taken into consideration in proportion to the time that has elapsed since the payments were made. If a member has withdrawn money from his capital share during the course of the year the reduced share shall be taken into account in proportion to the time that has elapsed since the withdrawal.

(3) The part of the profit which exceeds the profit shares calculated in accordance with the first and second paragraphs of this article, and any loss in the financial year, shall be allocated equally among the members.

Article 96

Reduction in capital share

(1) Each member may withdraw money from the company, to his own debit, up to an amount of 5 per cent of his capital share established in the previous financial year, and may also require, unless it would clearly damage the company, the payment of his share in the profit in the previous financial year which exceeds the aforementioned amount.

(2) A member may not reduce his capital share without the consent of the other members.

Article 97

Ban on disposing of a share by a member

A member may not dispose of his share without the consent of the other members.

Section 3

LEGAL RELATIONSHIP BETWEEN THE PARTNERS AND THIRD PERSONS

Article 98

**Representatives **

(1) Each of the members shall be entitled to represent the company unless they are barred from representing the company by the contract of members.

(2) The contract of members may provide that all or some of the members are only entitled to represent the company jointly. Members who are entitled to represent the company jointly may choose an individual from among their number and authorise that individual in writing to carry out certain operations or certain types of operations. For an expression of will to be given to the company it shall be sufficient for it to be expressed to one of the individuals entitled to represent the company jointly.

(3) The contract of members may provide that the members may only be entitled to represent the company together with the procurator. In this case the provisions laid down in the preceding paragraph shall apply mutatis mutandis.

(4) The barring of a member from representing the company, a decision to have joint representation or the inclusion of a procurator in accordance with the preceding paragraph as well as any changes in respect of a member’s entitlement to represent the company must be reported for entry in the register by all the members.

Article 99

Withdrawal of the right of representation

At the proposal of the other members the court may withdraw the right of representation from a member if good reason exists, and especially in the case of a serious breach of obligations or inability to represent the company properly.

Article 100

Personal liability of the members

(1) All the members shall be subsidiary liable to creditors for the liabilities of the company with all their assets. If the company fails to fulfil a liability to a creditor at his written request, all the members shall be jointly and severally liable.

(2) Any contrary agreement by the members in respect of their liability to third persons shall be without legal effect.

(3) If a member ceases to be a member of the company that member shall be liable for the liabilities of the company that were incurred up to the time of the announcement of the entry in the register of the termination of membership.

Article 101

Objections by an individual member

If a claim is lodged against a member resulting from the liabilities of the company, the member may make personal objections or objections which the company could make.

Article 102

Repayment of loans

In a company in which none of the members is a natural person, the provisions laid down in Articles 498 and 499 of this Act shall apply mutatis mutandis, but not if one of the members is another unlimited company or a limited partnership in which at least one personally liable member is a natural person.

Article 103

Liability of a new member

(1) Anyone who joins an existing company shall be liable in the same way as the other members for the liabilities the company assumed before he joined irrespective of whether or not the registered name was changed.

(2) Any contrary agreement by the members in respect of the liability of a new member shall be without legal effect against third persons.

Article 104

Duty to propose procedures in the event of insolvency or overindebtedness

(1) If a company in which none of the members is a natural person becomes insolvent or overindebted the commencement of a bankruptcy procedure or composition procedure shall be proposed; this shall not apply if one of the members is another unlimited company or a limited partnership in which at least one personally liable member is a natural person. The representatives of the company or the liquidators shall be obliged to propose the procedure. The proposal must be made without delay, and no later than three weeks after the occurrence of the fact relating to the insolvency or over indebtedness of the company which the relevant act determines as a reason for the commencement of bankruptcy proceedings.

(2) After a company has become insolvent or its overindebtedness becomes evident, the authorised representatives of the company or the liquidators may no longer execute any payments for the company other than payments which, even after this time, are in accordance with the careful and fair pursuit of operations.

(3) The members shall be jointly and severally liable for damage in the event of a violation of the provisions laid down in the preceding paragraph unless they demonstrate that they acted honestly and fair. Damage liability may not be limited or excluded in an agreement between the partners. If compensation is required to pay off the creditors of the company the liability for damage shall not cease even by relinquishment or set-off of the company nor if the action is based on a resolution by the members.

Section 4

DISSOLUTION OF A COMPANY AND EXCLUSION OF MEMBERS

Article 105

Reasons for dissolution

An unlimited company shall be dissolved:

– upon the expiry of the period for which it was formed;

– by resolution of the members;

– if the company goes bankruptcy;

– upon the death or dissolution of a member, unless otherwise provided in the contract of members;

– by giving notice;

– on the basis of a court ruling;

– if the number of members falls below two, except in the case under Article 115 of this Act;

– in other cases laid down in law.

Article 106

Notice by a member

(1) If a company is founded for an indefinite time a member may give notice to cancel the contract of members at the end of the financial year provided such notice is given in writing to the other members at least six months prior to this date.

(2) Any agreement excluding the right of a member to give notice or rendering it difficult in any way other than extending the notice period shall be null and void.

**Article 107 **

Dissolution on the basis of a court ruling

(1) If good reason exists, a member may require through legal action that a company be dissolved:

– before the expiry of the time determined for its duration, or

– without a notice period under Article 107 of this Act, if the company was formed for an indefinite period.

(2) Good reason shall be deemed to exist if another member wilfully or through gross negligence violates any substantial obligation under the contract of members or if the fulfilment of such obligation becomes impossible.

(3) Instead of the company being dissolved in accordance with the first paragraph of this article, one or more of the members may require through legal action the exclusion of the member in respect of whom good reason for such action exists.

(4) Any agreement excluding or restricting the right to require the dissolution of the company or the exclusion of a member shall be null and void.

Article 108

Company founded for the lifetime of a member

A company formed for the lifetime of a member or which continues as a dormant partnership following the period determined for its validity shall be deemed to be a company formed for an indefinite period in respect of the provisions on notice by a member or dissolution on the basis of a court ruling.

Article 109

Protection of the good faith of a member

If a company is dissolved in any way other than by notice, a member who is unaware of the dissolution of the company shall conduct the business of the company until he discovers or should have discovered that the company has been dissolved.

Article 110

Death or dissolution of a member

(1) If a company is dissolved on the death of a member, the inheritor of the deceased member must inform the other members of the death without delay and must continue the operations, if any risk is threatened, until the other members, together with him, make arrangements for the business conduct in accordance with this Act.

(2) In the case under the preceding paragraph the members must continue to carry out the operations entrusted to them.

(3) The provision laid down in the preceding paragraph shall also apply mutatis mutandis in other cases of the dissolution of a member.

Article 111

Exclusion of a member

**(1) **The contract of members may provide that the company will continue to exist with the remaining members if any of the members gives notice to cancel the contract of members, dies or is dissolved.

(2) In the case under the preceding paragraph it shall be deemed that the position of member ends at the moment when the company would be dissolved for any of the reasons referred to in the preceding paragraph.

Article 112

Settlement of assets with an excluded member

**(1) **The stake of an excluded partner shall accrue to the company assets of the remaining partners.

(2) Items given by an excluded member to the company for its use must be returned to the excluded member. The member may not claim compensation for accidental destruction of, damage to or reduction in the value of these items.

(3) An excluded member shall be paid in money that which he would receive in the settlement if the company were dissolved during his exclusion. If necessary, the value of the company’s assets shall be established with an appraisal.

(4) An excluded member shall be exempted from payment of the company’s debts. If such debt has not yet matured, instead of an exemption the company may offer him insurance.

(5) If the value of the company’s assets is insufficient to cover the company’s debts and the capital shares of the members, an excluded member must pay part of the shortfall in proportion to his share in the loss.

(6) The provisions laid down in the first to fifth paragraphs of this article shall also apply mutatis mutandis to the settlement of assets with the excluded member, whereby the balance of assets of the company at the time when the exclusion action was lodged shall be decisive.

Article 113

Participation by an excluded member in unfinished operations

**(1) **An excluded member shall participate in the profit and loss from operations which were not finished at the time of his exclusion. The company shall have the right to conclude such operations in the manner it believes most appropriate.

(2) At the end of each financial year an excluded member may require a statement of account of the operations concluded, the payment of sums owing to him and a report on the status of unfinished operations.

Article 114

Continuation of a company with inheritors

(1) Following the death of a member the company may continue with the inheritors if so provided for in the contract of members. An inheritor may require that on the basis of the share in the profit so far he be recognised as having the position of a limited partner and that the legator’s share accruing to him be recognised as his contribution to the limited partnership.

(2) An inheritor may be excluded from the company without a period of notice if the remaining members do not agree with his proposal under the preceding paragraph.

(3) Inheritors may exercise the rights under the first and second paragraphs of this article within one month of the inheritance resolution becoming final. If an inheritor does not have legal capacity and does not have a legal representative the one-month time limit shall not begin until the appointment of a representative or when the inheritor acquires legal capacity.

(4) If within the time limit under the preceding paragraph an inheritor is excluded from the company or the company is dissolved or the inheritor acquires the position of limited partner, he shall only be liable for the debts of the company existing up to that time in accordance with regulations on the liability of inheritors for a legator’s debts.

(5) The contract of members may not exclude the application of the provisions of this article. If, however, an inheritor acquires the position of limited partner, his share in the profit may be determined by the contract of members in a manner different to that of the legator.

Article 115

Continuation of a company with one member

(1) If for any reason a company is left with only one member, that member shall be obliged within one year to take all action necessary to bring the company into line with the conditions laid down in this Act or continue the activity as an entrepreneur.

(2) If within the time limit under the preceding paragraph the member fails to report the entry of a change in the register, the company shall be dissolved.

Article 116

Takeover by one member

(1) For a company with only two members, if a reason arises in respect of one of them for which in a company with a larger number of members it would be permissible to exclude the member from the company, the court may permit the other member, at his request, to take over the company with its assets and liabilities without it going into liquidation.

(2) The provisions applying to the exclusion of a member shall apply mutatis mutandis to the division of the company’s assets.

Article 117

Entry in the register

**(1) **The dissolution of a company must be reported for entry in the register by all the members unless the company is dissolved as a result of bankruptcy.

(2) The exclusion of a member must be reported for entry in the register by the remaining members.

(3) The entry in the register is possible without the inheritors participating in the application for entry in the register if such participation is prevented by special constraints and if it can be reasonably presumed that the death of a member was the cause of the dissolution of the company or exclusion of a member.

Section 5

LIQUIDATION OF A COMPANY

Article 118

Necessity of liquidation

**(1) **Liquidation shall be carried out in all cases under Article 105 of this Act except the case under the third indent.

(2) If there are no special provisions in this section the provisions laid down in this Act on the liquidation of a public limited company shall apply mutatis mutandis to the liquidation of companies.

Article 119

Appointment of liquidators

**(1) **Liquidation shall be carried out by all the members as liquidators unless it is entrusted by resolution of the members or in the contract of members to particular members or third persons. Where a single member has more than one inheritor they must appoint a joint representative.

(2) At the proposal of a person having a legal interest the court may, with good reason, appoint the liquidators; in this case the court may appoint persons who are not members to be liquidators.

**Article 120 **

Recall of liquidators

**(1) **Liquidators may be recalled by unanimous resolution of the persons referred to in the first paragraph of the preceding article.

(2) The court may also, with good reason, recall the liquidators at the proposal of a person having a legal interest.

Article 121

Entry in the register

(1) The liquidators must be reported for entry in the register by all the members. The same applies in respect of all changes of liquidators or their authorisations to represent the company. In the case of the death of a member the entry may be made without the participation of the inheritors in giving notification if such participation is prevented by special constraints and if it can be reasonably presumed that the notification conforms with the state of facts.

(2) The registration of court-appointed liquidators and the registration of a recall by the court of liquidators shall be carried out ex officio.

(3) Liquidators must deposit a specimen of their signature with the registration body.

Article 122

Rights and duties of liquidators

(1) Liquidators must conclude current operations, recover claims, realise the remaining assets and pay off creditors; new operations may be concluded in order to conclude unfinished operations.

(2) The liquidators shall represent the company.

Article 123

Return of items

Items given to the company for its use must be returned to the members. Members may not claim compensation for accidental destruction of, damage to or reduction in the value of these items.

Article 124

Joint representation and business conduct

(1) Where there is more than one liquidator they may only carry out activities concerningthe liquidation jointly, unless it is provided that they may operate individually; such provision must be entered in the register.

(2) Notwithstanding the preceding paragraph the liquidation administrators may authorise one from among themselves to carry out certain operations or certain types of operations. In order for a statement to be made to the company it shall be sufficient that it is made to one of the liquidators.

Article 125

Unlimited authorisation

Limitations on the authorisations of liquidators shall be without legal effect against third persons.

Article 126

Binding instructions for liquidators

In relations with participants the liquidators, even if they have been appointed by the court, must respect the decisions taken unanimously by the participants in respect of the business conduct.

**Article 127 **

Registered name and signing

Liquidators must add the words “in liquidation” to their signature and the registered name.

Article 128

Liquidation account

Liquidators must compile an account at the beginning and at the conclusion of the liquidation (opening and closing liquidation account).

Article 129

Division of assets

**(1) **After payment of the debts the liquidators shall divide the remaining assets of the company among the members in proportion to their interests in the capital established on the basis of the closing liquidation account.

(2) Money which is not needed during the liquidation shall be temporarily distributed, but a sum needed to cover non-matured and disputed liabilities as well as to insure the sums accruing to the members in the final division, shall be retained. During the liquidation the provisions laid down in the first paragraph of Article 96 of this Act shall not apply.

(3) If a dispute arises among the members as to the division of the assets of the company, the liquidators must delay the division of the assets of the company until a final resolution of the dispute.

Article 130

Settlement among the members

If the assets of the company are insufficient to pay the company’s liabilities and the members’ interests in the capital, the members must make up the shortfall in the same proportion in which they must cover losses. If one of the members is unable to obtain the amount which he must pay, the other members must make up the deficit in proportion to their shares in the capital.

Article 131

Internal and external relations

Until the end of the liquidation the provisions laid down in Sections 2 and 3 of this chapter shall apply in respect of the legal relations between the members and in respect of the relationship between the company and third persons, unless this section or the purpose of the liquidation indicate otherwise.

Article 132

Registration of the deletion of a company; books of account

(1) At the conclusion of the liquidation the liquidators must register the deletion of the company from the register.

(2) The books of account and the accounting documents of a company that has been dissolved shall be delivered to one of the members or to a third person for safekeeping. If agreement cannot be reached the court shall nominate a member or a third person.

(3) Members and their inheritors shall have the right to inspect and use the books ofaccount and documents.

Section 6

TIME-BARRING

Article 133

**Time-barring of claims on members **

(1) Claims on members arising from the liabilities of the company shall be time-barred five years after the dissolution of the company or the exclusion of the member, unless a claim against the company is time-barred within a shorter period.

(2) The period of time for the time-barring of claims shall begin no later than on the date the entry in the register of the dissolution of the company or the exclusion of the member is published.

(3) If a creditor’s claim on the company does not mature until after the entry in the register of the dissolution of the company, the period of time for time-barring of the claim shall begin on the day it matures.

Article 134

Interruption of the time-barring period

An interruption of the time-barring period in respect of the company shall also have effect in respect of the members.

Chapter 2

LIMITED PARTNERSHIP

Section 1

FORMATION

Article 135

Concept

(1) A limited partnership is a company formed by two or more persons in which at least one of the partners is liable for the liabilities of the company with all his assets (a general partner) and at least one partner is not liable for the liabilities of the company (a limited partner).

(2) Unless otherwise provided in this chapter, the provisions of this Act applying to an unlimited company shall apply mutatis mutandis to a limited partnership.

Article 136

Application for entry in the register

(1) An application for entry in the register must contain in addition to the data required for an unlimited company also details of the limited partners and the amount of their contributions.

(2) The publication of the entry of the company in the register shall state only the number of limited partners and not also details about them.

Section 2

LEGAL RELATIONS BETWEEN THE PARTNERS

Article 137

Contractual freedom

The legal relations between the partners shall be regulated in the partnership agreement.

Article 138

Managing the company

(1) Limited partners are not entitled to conduct the business of the company.

(2) A limited partner may not oppose the operations of a general partner provided they do not exceed the normal scope of activity of the company.

(3) Notwithstanding the provision laid down in Article 138 of this Act, a limited partner shall be liable in the same manner as a general partner if he acts in violation of the provision of the first paragraph of this article.

**Article 139 **

Violation of the ban on competition

The provisions laid down in Article 84 of this Act shall not apply to limited partners unless the partnership agreement provides otherwise.

Article 140

Right to supervise

(1) A limited partner shall have the right to demand a copy of the annual report and to inspect the business books and accounting documents in order to check their accuracy.

(2) Where good reasons exist the court may order at any time, at the proposal of a limited partner, that a copy of the annual report be delivered to the limited partner, or that other explanations be given or that the books of account and accounting documents be submitted to the limited partner.

Article 141

Profit and loss

(1) The provisions laid down in Article 95 of this Act shall also apply to a limited partner.

The profit of a limited partner shall only accrue to his share in the capital until it reaches the amount of his set contribution.

(2) A limited partner shall only share in a loss up to the amount of his share in the capital and the unpaid part of his contribution.

Article 142

Division of profit and loss

(1) If the profit does not exceed 5 per cent of the shares in the capital, the shares of the partners in the profit shall be determined in accordance with the provisions laid down in the first and second paragraphs of Article 95 of this Act.

(2) Unless agreed otherwise, for profits exceeding the percentage referred to in the preceding paragraph and for losses it shall be presumed that the proportions applied in the division correspond to the proportions between the shares.

Article 143

Withdrawal of money and payment of profit

(1) The provisions laid down in the first paragraph of Article 96 of this Act shall not apply to a limited partner.

(2) A limited partner may not demand payment of profit until his share in the capital has been reduced as a result of loss to below the amount paid for the set contribution or would be reduced below this amount if the payment were made.

(3) A limited partner shall not be obliged to repay profit received owing to subsequent losses.

Section 3

LEGAL RELATIONSHIP BETWEEN THE PARTNERS AND THIRD PERSONS

Article 144

Representatives

A limited partner shall not be entitled to represent the company but may be granted procuration or proxy.

Article 145

Liability of limited partners to creditors

A limited partner shall be liable to creditors for the liabilities of the company up to the amount of the unpaid sum which he would have to pay in under the partnership agreement.

Article 146

Extent of liability

(1) After the entry of a company in the register the limited partner’s contribution in respect of relations with the creditors of the company shall be deemed to be that which is entered in the register.

(2) Creditors may not appeal to an increase in the contribution by a limited partner which is not entered in the register unless the company has informed them of such increase in another manner.

(3) An agreement among the partners allowing a limited partner to avoid or defer payment of a contribution shall be without legal effect against creditors.

(4) If a contribution is returned to a limited partner it shall be deemed unpaid in respect of relations with creditors. The same shall apply in the case where a limited partner withdraws a share of the profit while his share in the capital is reduced as a result of losses to below the amount of the contribution paid in, or if by withdrawing a share in the profit the share in the capital is reduced to below the amount of the contribution paid in.

(5) In no case shall a limited partner be obliged to return that which he receives in good faith as profit based on the annual accounts.

(6) If the general partners are only legal persons who themselves are liable for liabilities, and a limited partner invests his share in a general partner which is a legal person as his contribution in the limited partnership, it shall be deemed that the limited partner’s share has not yet been paid into the limited partnership. This shall not apply in the case where the general partner is a legal person whose partners who are natural persons are alsoliable for its liabilities.

Article 147

Repayment of loans

The provisions laid down in Articles 498 and 499 of this Act shall apply mutatis mutandis to the repayment of loans in a limited partnership under the sixth paragraph of

Article 147.

Article 148

Reduction of a contribution

The reduction in the contribution of a limited partner shall have no legal effect in respect of creditors until it is entered in the register.

Article 149

Liability of a new partner

Anyone who joins an existing company as a limited partner shall be liable for the company’s liabilities assumed before he joined in accordance with the provisions laid down in Articles 145 and 146 of this Act.

Article 150

Liability before entry

If a company began operating before its entry in the register, a limited partner who consented to the commencement of operations shall be liable for the liabilities arising prior to the entry in the same manner as a general partner, unless the creditor knew of his participation as a limited partner.

Article 151

Death of a limited partner

A company shall not be dissolved as a result of the death of a limited partner.

Section 4

DUAL COMPANY

Article 152

Concept

A limited partnership in which the sole general partner is a company in which there are no personally liable partners, or where all general partners are such companies, is a dual company.

Article 153

A company as a general partner

A company may be formed for the sole purpose of incorporating it as a general partner into a dual company.

Article 154

Ban on restructuring as a dual company

Public limited companies, limited liability companies and limited partnerships with share capital may not be restructured as dual companies.

Article 155

Ban on forming new dual companies

A dual company may not be a general partner in a limited partnership.

Article 156

Business documents

(1) All business documents must state in addition to the registered name of the dual company also the names and surnames of the members of the management board of the general partner in the dual company.

(2) In matters relating to the business conduct of a dual company the registered name of the general partner must be added when a natural person signs for the company.

Article 157

Unlimited company as a dual company

The provisions laid down in this section shall apply mutatis mutandis to an unlimited company in which all the partners are companies that do not have personally liable partners.

Chapter 3

DORMANT PARTNERSHIP

Article 158

Concept

(1) A dormant partnership shall be formed by a contract on the basis of which a dormant partner through a contribution of assets in the undertaking of another person (hereinafter:

“holder of the dormant partnership”) obtains the right to participate in its profit.

(2) The holder of a dormant partnership and one or more dormant partners shall freely agree on the relations between them and must act in the implementation of these relations with the same care with which they would conduct their own affairs.

(3) The holder of a dormant partnership shall enter into legal transactions and shall be the exclusive holder of all the rights and obligations deriving from the operations of the dormant partnership.

Article 159

**Relations between the holder of a dormant partnership and the dormant partners **

The contract shall apply to relations between the holder of a dormant partnership and the dormant partners, unless this Act provides otherwise.

Article 160

Profit and loss

If the share of a dormant partner in the profit or loss of the partnership is not determined, the court shall define that share in any dispute as to the assets invested and other circumstances.

Article 161

Calculation of profit and loss

(1) At the end of every financial year the holder of a dormant partnership must calculate the profit and loss and pay the profit accruing to each dormant partner based on his contribution.

(2) When there is a loss a dormant partner shall share in that loss up to the amount of his subscribed contribution, whether or not it has been paid in yet. A dormant partner shall not be obliged to return any profit received owing to subsequent losses. Until his contribution is reduced owing to losses, the annual profit shall be used to cover losses unless agreed otherwise.

(3) Profit which a dormant partner does not take shall not increase his contribution in the partnership.

Article 162

Right to be informed

(1) A dormant partner shall have the right to demand from the holder of the dormant partnership a copy of the annual report and to demand access to the books of account and accounting documents.

(2) If the holder of the dormant partnership fails to approve the demands made by a dormant partner under the preceding paragraph, the court may decide, upon a request from the dormant partner, that a copy of the annual report be delivered to the dormant partner and that the books of account and accounting documents be submitted to him.

(3) The rights of a sleeping partner laid down in paragraphs 1 and 2 of this article may not be excluded or limited by the contract.

Article 163

Accountability

The name or surname of a dormant partner may not be included in the registered name of the holder of the dormant partnership, otherwise a dormant partner who knew or should have known about this shall be jointly and severally liable with all his assets to creditors for the liabilities of the holder of the dormant partnership.

Article 164

Dissolution of a dormant partnership

A dormant partnership shall be dissolved:

– upon the expiry of the period for which it was formed;

– by agreement between the holder and the dormant partner;

– upon the abandonment of the activity of the holder of the dormant partnership;

– upon the death or dissolution of the holder of the dormant partnership, unless otherwise provided by the contract;

– when a dormant partner gives notice; or

– on the basis of a court ruling.

Article 165

Settlement

If a dormant partnership is not dissolved as a result of the bankruptcy of the holder of the dormant partnership, the holder of the dormant partnership must carry out a settlement with the dormant partner and pay out his contribution to him in money, unless the two sides agreed otherwise in the contract.

Article 166

Bankruptcy of the holder of a dormant partnership

(1) If bankruptcy proceedings are commenced against the holder of a dormant partnership the dormant partner must pay in the matured part of his contribution. The dormant partner may pursue a claim against the holder of the dormant partnership as a bankruptcy creditor for the amount of the contribution that has already been paid in or the amount of the contribution that has matured at the time the bankruptcy commences which exceeds the share of the loss which the dormant partner would have to pay.

(2) The dormant partner shall not have to pay into the bankruptcy estate the part of the contribution which has not matured by the time of the commencement of the bankruptcy against the holder of the dormant partnership, irrespective of the share of the loss which he would have to pay.

Article 167

Contesting the repayment of a contribution

**(1) **If in the year prior to the commencement of bankruptcy a contribution was repaid by agreement to a dormant partner in full or in part, or if his share of a loss was waived in full or in part, the bankruptcy administrator may contest such repayment or waiver irrespective of whether it occurred together with or without the dissolution of the dormant partnership.

(2) It shall not be possible to contest the repayment or waiver if the bankruptcy came about due to circumstances that arose after the concluding of an agreement referred to in the preceding paragraph of this article.

Chapter 4

PUBLIC LIMITED COMPANY

Section 1

GENERAL PROVISIONS

Article 168

Concept

(1) A public limited company is a company which has subscribed capital divided into shares.

(2) A public limited company shall be liable to creditors for its obligations with all its assets.

(3) Shareholders shall not be liable to creditors for the obligations of the company.

Article 169

Founders

A public limited company may be formed by one or more natural or legal persons who shall adopt the company’s articles of association.

Article 170

Subscribed capital

**Subscribed capital shall be denominated in euros. **

Article 171

Minimum value of subscribed capital

The minimum amount of the capital stock shall be 25,000 euros.

Article 172

Form and minimum value of shares

(1) Shares can be either nominal or no-par value shares. The company may not have the two forms of shares at the same time.

(2) Shares with nominal amounts shall be denominated to 1 euro or multiples thereof.

The proportion of share with nominal amount in the subscribed capital shall be determined according to the ratio between its nominal amount and the amount of the subscribed capital.

(3) The no-par value shares shall not have a nominal amount. Each no-par value share shall have the same proportion and the related amount in the subscribed capital. The amount in the subscribed capital, related to an individual no-par value share (hereinafter:

the related amount) shall not be lower than 1 euro. The participation of an individual nopar value share in the subscribed capital shall be determined on the basis of the number of issued no-par value shares.

(4) Shares with different nominal amount than the one determined by the second paragraph hereunder and no-par value shares with lower related amount than the one defined in the previous paragraph shall be null and void. The issuers shall be jointly and severally liable for damage arising from any such issue.

(5) By means of an amendment to the articles of association and subject to unchanged subscribed capital the shares may be split up into nominal amount shares or no-par value shares:

• shares with a lower nominal value or split into several parts, or

• combined into shares with a higher nominal value or fewer parts, subject to the consent of all shareholders.

(6) The provisions laid down in this article shall also apply to the confirmation of participation which is delivered to shareholders before the shares are issued (hereinafter:

“interim certificate”).

Article 173

Issue value of shares

(1) The share may not be issued for an amount (hereinafter: issue value) which is lower than the nominal amount and in the case of no-par value share lower than the related share (hereinafter: lowest issue value).

(2) A share issue for a greater amount shall be permitted.

Section 2

SHARES

Article 174

Shares as securities

**(1) **Shares are securities.

(2) A share certificate shall be issued for each share or for several shares in the same class together (sum share).

Article 175

Bearer and registered shares

(1) Shares shall be made out to their bearer or to a name.

(2) Shares must be made out to a name if they are issued before the full payment of the issue value. The amount of part payments shall be stated on the share.

(3) Interim certificates shall be made out to a name.

(4) Bearer interim certificates shall be null and void. The issuers shall be jointly and severally liable for damage arising from any such issue.

Article 176

Ordinary and priority shares

(1) In respect of the rights deriving from them, shares shall be classified as ordinary or priority .

(2) Ordinary shares are shares which grant the holder:

– the right to participate in the management of the company;

– the right to a part of the profit (dividend); and

– the right to a corresponding part of the remaining assets after the liquidation or bankruptcy of the company.

(3) Priority shares are shares which confer upon their holders in addition to the rights set out in the preceding paragraph also certain priority rights, such as priority in the payment of predetermined sums or percentages of the nominal value of the shares or of the profit, priority payment upon the liquidation of the company and other rights set out in the articles of association of the company.

(4) In accordance with the resolution on the share issue, a cumulative priority share shall confer upon its holder the priority right to payment of all outstanding dividends before dividends of any sort are paid to holders of ordinary shares in accordance with the resolution on the distribution of profit.

(5) A participating priority share shall confer upon its holder in addition to priority dividends also the right to payment of dividends accruing to holders of ordinary shares in accordance with the resolution on the use of profit.

(6) Rights deriving from shares are indivisible.

Article 177

Share classes

Shares carrying the same rights shall form a single share class.

Article 178

Voting rights

(1) Each share shall confer one voting right.

(2) Only priority shares may be issued without voting rights, but such shares may not comprise more than half of a company’s subscribed capital.

(3) It shall be forbidden to issue shares which would in the same proportion of subscribed capital, confer a different number of votes.

Article 179

Elements of a share

The share must include:

– a designation that it is a share and the share form and class;

– the registered name and registered office of the issuer of the share;

– the registered name or the name and surname of the buyer of the share (registered shares) or a designation that the share is held by its bearer (bearer shares);

• in shares with nominal amount such nominal amount, and

– the place and date of issue, the serial number of the share and a facsimile of the signatures of the authorised persons of the share issuer.

Article 180

Parts of a share

(1) A share shall be comprised of three parts.

(2) The first part of the share is the bare shell, on which all the details set out in the preceding article are stated.

(3) The second part of the share is the coupon sheet containing coupons for the payment of dividends. Each individual dividend payment coupon must contain:

– the serial number of the dividend payment coupon;

– the number of the share on the basis of which dividends are paid;

– the registered name and registered office of the issuer of the share;

– the year in which a dividend is paid; and

– a facsimile of the signatures of the authorised persons of the share issuer.

(4) The third part is the renewal coupon, with which the shareholder exercises the right to a new coupon sheet for the payment of dividends.

Article 181

Confirmation of shares issued

(1) The company shall issue the shareholders the confirmations of the number of their shares. In shares with nominal amount, such confirmation must clearly state the nominal amount of the share.

(2) A confirmation under the preceding paragraph may only be used as an evidentiary paper for exercising the right to participate in voting at the general meeting of shareholders.

Article 182

Shares in book-entry form

**(1) **Shares must be issued in book-entry form.

(2) For the shares stated in the preceding paragraph, the provisions of the act regulating book-entry securities shall apply.

Section 3

FORMATION

1. Subsection 3

Common provisions

Article 183

Content of the articles of association

(1) The articles of association, which must be drawn up in the form of a notarial record, must determine:

– the name, surname and address or the registered name and registered office of each founder;

– the registered name and registered office of the company;

– the activity of the company;

– the amount of the subscribed capital;

• if the company has shares with nominal amount: – the nominal amount of the shares and the number of shares of each nominal amount, and where there is more than one share class also the share class and the number of shares issued in each particular class;

• if the company has no-par value shares: – the number of shares and where there is more than one share class also the share class and the number of shares issued in each particular class;

– whether the shares are bearer or registered shares;

• the amount of paid-in capital as at the day of the company’s registration and the paid-in capital at a time; management system (one- or two-tier);

– the number of members of the management and supervisory bodies or the act in which this number is determined;

• term of office of members of the management or supervisory bodies;

– the form and method of announcements of importance for the company or for the shareholders;

– the duration of the company if it is formed for a fixed period;

– the method of dissolving the company.

(2) Matters regulated by law may only be regulated differently by the articles of association where explicitly so provided by law. Additional matters may only be regulated by the articles of association where such matters are not comprehensively regulated by law.

(3) Other issues of importance for the company which are not regulated in the articles of association may be regulated in the company’s other acts in accordance with this Act.

Article 184

Converting the share type

Where so provided in the articles of association, a bearer share may be converted into a registered share or a registered share into a bearer share upon a request from a shareholder.

Article 185

Disclosure of information and communications of the company

Information or communications which the management believes are important for the shareholders shall be published in a publication or electronic media determined by the articles of association.

Article 186

Special benefits and formation expenses

(1) Special benefits for particular shareholders or third persons, stating the person entitled to these benefits, may only be determined by the articles of association.

(2) Only the articles of association may determine the costs which the company shall reimburse to the shareholders or to other persons as an allowance or as a payment for preparing the formation of the company.

(3) If special benefits or costs within the meaning of the first and second paragraphs of this article are not provided for in the articles of association, the contracts and legal acts granting such benefits or providing for the repayment of costs shall have no legal effect against the company. This may not be remedied by an amendment to the articles of association after the company has been entered in the register.

(4) The provisions on special benefits and costs laid down in the first and second paragraphs of this article may only be amended after five years have elapsed since the entry of the company in the register.

**Article 187 **

Non-cash contribution and non-cash acquisition

(1) If shareholders make contributions other than by paying in the issue value of the shares in money (non-cash contribution), or if the company acquires an existing or future establishment or other items of property (non-cash acquisition), the articles of association must determine: the subject of the non-cash contribution or non-cash acquisition, the person from whom the company acquires it, and the number of shares and, in the case of shares with nominal value also the nominal value provided by the non-cash contribution or non-cash acquisition. It shall also be deemed a non-cash contribution if the company acquires an item of property in respect of which a payment is guaranteed which should be added to the contribution by the shareholder (non-cash acquisition).

(2) Only items of property or rights whose economic value can be established may be considered a non-cash contribution or a non-cash acquisition. The duty to perform a service shall not be considered a non-cash contribution or a non-cash acquisition within the meaning of this article.

(3) If the articles of association do contain provisions as set out in the first paragraph of this article, any contracts on non-cash contributions or a non-cash acquisition as well as the legal actions for their execution shall not be valid against the company. If an agreement in respect of a non-cash contribution or a non-cash acquisition is not valid, the shareholder shall be obliged to pay in the issue value of the shares.

(4) After the entry of a company in the register any defects under the preceding paragraph of this article may not be rectified by means of an amendment to the articles of association.

(5) The provisions laid down in this Act on non-cash contributions shall apply mutatis mutandis to a non-cash acquisition.

Subsection 2

Subsequent formation

Article 188

Subsequent formation

**(1) **A contract concluded by a company within the first two years following the entry of its formation in the register on the basis of which the company acquires things or rights at a price amounting to at least one-tenth of the company’s subscribed capital (hereinafter referred to as a “subsequent formation contract”) shall enter into force when the general meeting has adopted a resolution giving consent to the concluding of the contract and the contract has been entered in the register. Legal actions taken by the company for the purpose of fulfilment of a subsequent formation contract to which the general meeting has not given consent and which is not entered in the register shall be null and void.

(2) A subsequent formation contract must be concluded in writing, except for particular types of contract which the law provides must be concluded in the form of a notarial record. The company must enable all shareholders to inspect the subsequent formation contract at the company’s registered office and issue a copy of the contract to them on request and free of charge by the following working day at the latest.

(3) The management must draw up a written report on the subsequent formation contract. In the report the management must explain in particular the purpose of acquiring the assets as regulated by the subsequent formation contract.

(4) A subsequent formation contract must be examined by an auditor. The provisions of Article 195 of this Act shall apply mutatis mutandis to the auditing of a subsequent formation contract.

(5) On the basis of the report of the management and the report on the audit of the subsequent formation contract the supervisory board must examine the contract and draw up a written report.

(6) The subsequent formation contract and the reports referred to in the third, fourth and fifth paragraphs of this article must be submitted to a session of the general meeting. At the start of the debate in the general meeting the management must give an oral explanation of the content of the subsequent formation contract.

(7) The general meeting resolution giving consent to the concluding of a subsequent formation contract shall be valid if at least three-quarters of the subscribed capital represented in the voting votes in favour of the resolution. If a subsequent formation contract is concluded within the first year following the entry of the company in the register the general meeting resolution giving consent to the concluding of a subsequent formation contract shall be valid if at least three-quarters of the total subscribed capital votes in favour of the resolution. The articles of association may stipulate a larger majority of the capital and may also lay down other requirements.

(8) A subsequent formation contract on which the general meeting has decided shall be included in, or attached to, the minutes of the general meeting.

(9) The management must submit an application for the entry of the subsequent formation contract in the register. The application must be accompanied by:

– the original or a notarised copy of the subsequent formation contract,

– the minutes of the general meeting which decided on consent to the concluding of a subsequent formation contract, and

– the reports referred to in the third, fourth and fifth paragraphs of this article.

(10) The registration body may refuse the application for entry if the auditor establishes or if it is clear that the price for acquiring the assets which are the subject of the subsequent formation contract is inappropriately high.

(11) When it enters the subsequent formation contract in the register the registration body shall enter:

– the date on which the contract was concluded and the date of the session of the general meeting which adopted the resolution giving consent to the contract,

– the assets which are the subject of the contract, and

– the price.

(12) The provisions of Articles 203 and 204 of this Act shall apply mutatis mutandis in respect of the damage liability of the members of the management or the members of the supervisory board and other persons for damage which is caused to the company as a result of the acquisition of assets in violation of the provisions of the first to eleventh paragraphs of this article.

(13) The provisions of the first to twelfth paragraphs of this article shall not apply in respect of assets which the company acquires in its regular business conduct or which it acquires on the basis of execution or on the regulated market.

Subsection 3

Simultaneous formation

**Article 189 **

Concept

A public limited company may be formed by means of all the founders adopting and signing the articles of association and acquiring all the shares themselves.

Article 190

Formation of a company

A company shall be formed once the founders acquire all the shares.

Article 191

Paying for shares

(1) Shares may be paid for with money or non-cash contributions.

(2) A least one-third of the subscribed capital must comprise shares paid for with money.

(3) Only payments made with legal means of payment to the bank account of a company being formed shall be considered a cash payment. In the case of non-cash contributions, a non-cash acquisition and cash payments the company must be allowed permanently and freely to dispose of them from the time the company is entered in the register. Before the entry of a public limited company in the register, at least 25 per cent of the lowest issue value of each share which is paid for in money must be paid in. For those shares that were partly covered by non-cash contributions the part which is not covered by payment with a non-cash contribution must be paid for in money before the company is entered in the register.

(4) If the shares are sold above the lowest issue value the entire additional amount must be paid in before the company is entered in the register.

(5) If a company is formed by one founder that founder must pay for the shares in full before the company is entered in the register or provide appropriate collateral to the company.

Article 192

Appointment of the initial bodies of a company

(1) The founders shall appoint the first supervisory or management board of the company and an auditor for the first full or partial financial year.

(2) The members the supervisory or management board shall be appointed only until the first general meeting.

(3) The supervisory board shall appoint the members of the management board and the management board shall appoint the first executive managers.

Article 193

Formation report

(1) The founders must compile a written report on the forming of the company (hereinafter: “formation report”).

(2) The formation report must present the significant circumstances on which the payment for non-cash contributions or a non-cash acquisition depended. In this regard the following in particular shall be stated:

– legal transactions by means of which the company acquired non-cash contributions;

– if an undertaking is invested in the company, the profit of that enterprise for the previous two years; and

– acquisition and production costs in the previous two years.

(3) The following shall also be stated in the formation report:

– whether and to what extent shares were acquired for the account of a member of the management or the supervisory board at the time of formation;

– whether and in what manner a member of the management or the supervisory board obtained a special benefit or payment for preparing the formation .

Article 194

Formation audit

(1) The members of the management and the supervisory board must examine the process of the formation of the company.

(2) In addition, one or more forming auditors must review the formation :

– if a member of the management or the supervisory board acquired shares;

– if shares were acquired at the time of formation for the account of a member of the management or the supervisory board;

– whether a member of the management or the supervisory board obtained a special benefit or payment for preparing the formation, or

– if the formation is carried out with non-cash contributions.

(3) The forming auditors shall be appointed by the court.

Article 195

Scope of the formation audit

(1) The formation audit shall establish in particular:

– whether the founders’ data concerning the acquisition of shares, contributions to the subscribed capital, special benefits and non-cash contributions and non-cash acquisition are correct and complete;

– whether the value of non-cash contributions and non-cash acquisition reach at least the issue value of the shares or the value of payments which have to be provided for this purpose.

(2) A written report shall be drawn up on each audit which shall describe the subject of the non-cash contribution or the non-cash acquisition and state the methods of assessment used.

(3) The formation auditor shall deliver one copy of the report to the registration body and one copy to the company’s management. The report shall be available for public inspection at the registration body.

(4) The law regulating auditing shall apply mutatis mutandis to the formation audit in respect of the auditing procedure and conditions. The provisions of the third paragraph of Article 57 of this Act shall apply mutatis mutandis in respect of the damage liability of formation auditors.

Article 196

Disagreement between the founders and the formation auditors

(1) The formation auditors may demand all necessary explanations and evidence from the founders.

(2) Any disagreement between the founders and the formation auditors as to the scope of explanations and evidence which must be provided by the founders shall be decided by the court.

Article 197

Payment and reimbursement of the costs of the formation auditors

The formation auditors shall have the right to reimbursement of their costs and payment for their work. The costs and the payment shall be set in accordance with the tariff adopted by the Slovenian Institute of Auditors on the basis of the law regulating auditing, and they shall be debited to the company.

Article 198

Notification for entry of a company in the register

The members of the management or the supervisory board shall make the notification for the entry of the company in the register.

Article 199

Content of a notification for entry in the register

**(1) **A notification for entry in the register shall contain:

– the amount for which shares are being issued;

– evidence from an authorised bank that the management is free to dispose of the sum paid in;

– an assurance from the founders that they are aware of the duty to provide information to the registration body and that there are no constraints or circumstances not in conformity with the provisions laid down in the second paragraph of Article 255 of this Act;

– a statement as to the scope of entitlements enjoyed by the management in representing the company.

(2) A notification for entry in the register under the preceding paragraph shall be submitted together with:

– the articles of association and the documents which formed the basis on which the articles of association were prepared, and the documents which formed the basis on which the founders acquired shares;

– a statement of account of the formation expenses debited to the company. In this statement of account payments shall be stated by order and amount, and recipients of payments shall be stated individually;

• the documents on the appointment of the of members of the management or supervisory bodies;

– the formation report and the audit reports of the members of the management or the supervisory board and of the formation auditors. These reports must be accompanied by the documents on which the significant findings contained in the reports are based.

(3) Members of the management board must deposit a specimen of their signature with the registration body.

(4) The originals or certified copies of the submitted documents shall be kept at the registration body.

Article 200

Refusal of a notification for entry in the register

(1) The registration body must verify that the company has been properly formed and reported. If this is not the case, the registration body shall refuse the notification.

(2) The registration body may also reject an application if the formation auditors establish, or if it is clear, that the formation report or the report by the members of the management or the supervisory board are inaccurate, incomplete or do not conform with the law; the same shall apply if the formation auditors state, or the registration body establishes, that the value of non-cash contributions or a non-cash acquisition is significantly less than the lowest emission value of the shares or the payments which need to be provided for them.

Article 201

**Content of an entry in the register **

The following shall also be entered in the register:

– the amount of subscribed capital and any authorised capital;

– the date on which the articles of association were adopted;

– the names, surnames and addresses of the members of the management board;

– the duration of the company if it is established for a fixed period; and

– the entitlements of the members of the management to represent the company.

Article 202

Notification of entry

(1) In addition to the content of an entry in the register under the preceding article, the following shall also be published:

– the details set out in the first paragraph of Article 183 and Articles 184 to 187 of this Act;

– the articles of association or other act on the composition of the management;

– the issue value of the shares;

– the name, surname and address or the registered name and registered office of the founders;

– the name, surname and address and address of the members of the first supervisory or management board.

(2) At the same time an announcement shall be made that the submitted documents can be inspected at the registration body, in particular the reports by the members of the management or the supervisory board and the formation auditors.

Article 203

Liability of the founders

**(1) **The founders shall be jointly and severally liable to the company for damage arising from the inaccuracy of information provided in connection with the formation of the company.

(2) If the founders wilfully or though gross negligence cause damage to the company through non-cash contributions or formation expenses, they shall be jointly and severally liable to compensate the company for damage thus incurred. A founder who has acted with a diligence of a good manager shall not be liable for such damage.

Article 204

Liability of other persons

In addition to the founders and persons for whose account the founders acquired shares, the following persons shall also be jointly and severally liable to compensate the company for damage:

– a person who, when a payment was received which in contravention of regulations was not included among the formation expenses, knew or should have known that wilful evasion was being committed or who abetted such evasion;

– a person who by means of non-cash contributions wilfully or through gross negligence damaged the company or made such damage possible;

– a person who, prior to the entry of the company in the register or within the first two years after the entry, publicly announced shares in order to put them into circulation, if that person knew or with a diligence of a good manager should have known of the inaccuracy or the incompleteness of the information provided for the formation of the company, or of damage caused to the company through non-cash contributions.

**Article 205 **

Operating prior to entry in the register

**(1) **If a company assumes a debt prior to its entry in the register the consent of the creditor shall not be necessary for the assumption of the debt to be valid, provided the company approves the assumption of the debt within three months of the entry of the company in the register and reports this to the creditor and the debtor.

(2) Prior to the entry of a company in the register the right to a share may not be transferred, and shares or interim certificates may not be issued. Shares or interim certificates issued before this time shall be null and void. The issuers shall be jointly and severally liable to the holders for damage arising from any such issue.

Article 206

Company with a single shareholder

If a single shareholder becomes the holder of all the shares, or if the only other shareholder is the company itself, this must be entered in the register. The full name and address or registered name and office of the sole shareholder shall also be entered in the register.

Subsection 4

Successive formation

Article 207

Concept

**(1) **A company may also be formed through a subscription to shares on the basis of an announcement containing an invitation to the public to subscribe shares (hereinafter: a prospectus), as stipulated by the act regulating securities market, unless otherwise determined by law. For such formation, the provisions of the previous subsection shall apply mutatis mutandis unless otherwise stipulated by the provisions of this subsection.

(2) The founders shall adopt articles of association, publish a prospectus and acquire some of the shares.

Article 208

Subscribing and paying for shares

**(1) **The shares and the monetary payment for them may only be subscribed at banks.

(2) The articles of association, the reports of the founders and the auditors, and the prospectus must be made available to subscribers for inspection at the bank handling the subscription and payment for the shares.

Article 209

Subscription form

(1) Each subscriber must sign three copies of a statement to the effect that he is subscribing to the shares (subscription form), one for himself and the other two for the company. If the subscription to shares is carried out by a proxy, the copies of the subscription form remaining with the company must be accompanied by the authorisation.

(2) The subscription form must contain:

– the number and class of shares subscribed to and their issue value at which they are subscribed to;

• if the company has shares with nominal amount, their nominal amount:

– a statement from the subscriber confirming that he will pay for the shares under the conditions set out in the prospectus;

– the amount in money which the subscriber will pay for subscribing to the shares;

– a statement from the subscriber to the effect that he is acquainted with the articles of association, the prospectus and the reports by the founders and the auditors and that he agrees with the articles of association and the formation of the company;

– the signature of the subscriber or his proxy and the address or registered name and registered office and signature of the authorised person of the bank at which the subscriptions and payments were carried out and written confirmation from the bank that the payment has been received.

(3) A subscription form not containing the prescribed information or which limits the obligations of the subscriber in contravention of this Act shall be null and void.

Article 210

Unsuccessful subscription

(1) The time limit for subscribing to and paying for shares may not be longer than three months from the day determined as the start of the subscription.

(2) If within the time limit under the preceding paragraph all the shares on offer are not subscribed to and correctly paid for, the founders may themselves, within 15 days of the expiry of this time limit, acquire or subscribe to the shares that have not been subscribed to and paid for.

(3) If even in the manner described in the preceding paragraph all the shares on offer are not acquired or subscribed to and correctly paid for, it shall be deemed that the formation has been unsuccessful and the founders must, within the next 15 days, publish a new announcement calling on the subscribers to collect the sums they have paid in.

(4) Persons who made non-cash contributions or who acquired shares without subscription on the basis of the prospectus shall be called upon separately to collect what they have paid in or contributed to the company whose formation was not successful.

Article 211

Late payment

(1) If any of the subsequent payments falling due prior to the entry of the company in the register are not made on time, the founders shall have the right to declare the acquisition of or the subscription to these shares to be invalid, and the shares may be acquired by the founders themselves or some other person.

(2) Payments made by the original acquirers or subscribers shall accrue to the company.

Article 212

Allocation of subscribed shares

(1) If the share subscription and payment have been successful the founders must allocate the shares among the subscribers within 15 days of the expiry of the time limit set out in the prospectus for the share subscription. Shares may not be allocated to a subscriber if any of the founders knows that that subscriber is insolvent.

(2) In the case under the second paragraph of Article 210 of this Act the shares must be allocated within one month of the expiry of the time limit set out in the prospectus for the share subscription.

(3) Complete lists detailing how many shares of each type or class were subscribed to and allocated to each of the subscribers must be made available for inspection by the subscribers at the bank at which the share subscription was carried out. The list must include an instruction to subscribers who were not allocated any shares, or who were not allocated all the shares they subscribed to, to collect the excess sums they paid in.

Article 213

Disposal of payments

The founders may not dispose of payments made for shares, and the management may only dispose of the payments after the company has been entered in the register. Special allowances, reimbursements and bonuses may not be paid out to the debit of the subscribed capital of the company.

Article 214

Convening the founding general meeting

**(1) **The founding general meeting must be held no later than two months after the expiry of the time limit set out in the prospectus for completion of the share subscription. The founders must convene the founding general meeting with an announcement which must be published in the same manner as the prospectus and with an interval of at least 15 days between the date of the last announcement of the prospectus and the date of the founding general meeting.

(2) Within the time limit set out in the preceding paragraph the subscribers who were allocated shares must be allowed to inspect, at the bank at which the share subscription was carried out and at other places at the discretion of the founders, the articles of association, the reports by the founders and the auditors, a list of the subscription forms, the report by the founders on the formation expenses, lists detailing the allocation of shares, and a list of persons who acquired shares without subscription on the basis of the prospectus with a statement as to how many shares of which type and class each of them acquired.

(3) The court may extend the time limit for holding the founding general meeting by one month upon a request from the founders based on good reasons.

(4) The provisions laid down in this Act concerning general meetings shall apply to the founding general meeting in the absence of any special provisions.

Article 215

Consequences of the failure to hold a founding general meeting

(1) If a founding general meeting is not held on time it shall be deemed that the formation of the company was not successful.

(2) Within 15 days of the expiry of the time limit for holding a founding general meeting, the founders must publish an announcement in the same manner as the announcement of the first prospectus calling upon the share subscribers to collect their payments.

(3) If the founders fail to publish this announcement on time the announcement shall be published by the court upon a proposal from one of the subscribers and at the cost of the founders.

Article 216

Quorum and reconvening

(1) The founding general meeting must be held at the registered office of the company if no other location was specified in the prospectus.

(2) A majority of all the shares must be represented at the founding general meeting, and if the issuing of shares in various classes is envisaged also a majority of the shares in each class.

(3) The founding general meeting shall be opened by a notary who must be invited by the founders. The notary must compile a list of the share subscribers and acquirers present, or their representatives, and establish whether the conditions laid down in the preceding paragraph are met.

(4) If the general meeting is not conducted in accordance with the provisions laid down in the first to third paragraphs of this article and if the time limit has not been extended in accordance with the third paragraph of Article 214 of this Act, the founders may reconvene the founding general meeting no later than within 15 days; at least eight days and no more than 15 days must pass between the date the new general meeting is convened and the date of the new general meeting.

(5) If the founders do not reconvene the general meeting or if that too is not conducted in accordance with the first to fourth paragraphs of this article, it shall be deemed that the formation of the company has not been successful.

Article 217

The progress of a founding general meeting

(1) After it has been opened the general meeting shall elect a chairman and two vote counters. Thereafter the reports of the founders and the auditors shall be read through, and also any supplements to these reports but only at the request of shareholders holding at least 10 per cent of all the votes of the shareholders present or represented.

(2) The minutes of the general meeting shall be kept by the notary, and they must be signed by, in addition to the notary, the chairman of the general meeting, the two vote counters and the founders of the company.

Article 218

Powers of the founding general meeting

(1) The founding general meeting shall:

– establish whether all shares have been subscribed to or acquired, whether the shares have been allocated and whether the payments which should have been made by the time of the founding general meeting have been made in accordance with this Act and the articles of association;

– whether all requirements have been met in respect of non-cash contributions so that the company will be able to dispose freely of the non-cash contributions as soon as it is entered in the register;

– establish the maximum permitted amount of formation expenses to be debited to the company;

– elect the bodies of a company for which the general meeting is competent pursuant to the law or the articles of association.

(2) A company shall be formed once the founding general meeting has adopted all the resolutions under the preceding paragraph.

(3) The resolutions under the first paragraph of this article must be submitted together with the notification for entry in the register in addition to the supplements under the second paragraph of Article 199 of this Act.

Article 219

Voting

(1) At the founding general meeting each share shall carry one vote.

(2) Votes must be taken separately for each non-cash contribution on the findings under the second indent of the first paragraph of the preceding article, and the founders and subscribers or acquirers of shares on the basis of non-cash contributions shall not have the right to vote. The founders shall not have the right to vote on matters under the third indent of the first paragraph of the preceding article.

(3) Decisions shall be taken at the founding general meeting by majority of shares represented at the general meeting which are not excluded from voting.

(4) An amendment to the articles of association in respect of the provisions laid down in Article 183 of this Act may only be adopted with the consent of all subscribers and acquirers of shares. A decision to amend to any other provisions in the articles of association may only be voted on if persons entitled to vote whose votes represent twothirds of the subscribed capital are present. Any such decision must be unanimous.

Article 220

Re-examination of the founders’ report

(1) If the founding general meeting rejects a proposal to re-examine the founders’ report, such re-examination shall nevertheless be carried out if it is requested prior to the election of the bodies of the company by the subscribers and acquirers of at least one-fifth of all the shares which were paid for in money.

(2) Subscribers and acquirers who pay for their shares exclusively in money shall elect three commissioners . One of them may be selected in a separate ballot by the subscribers and acquirers who demanded a re-examination of the founders’ report; these persons shall also participate in the election of other commissioners .

(3) After the election of the commissioners the founding general meeting shall interrupt its work for seven days and set a date and time for a new session of the general meeting shall be without the need for it to be reconvened.

(4) The commissioners shall submit a written report to the founding general meeting. If a majority of the commissioners estimate the value of non-cash contributions to be less than two-thirds of the original estimate, the founding general meeting must vote on whether the company should in fact be formed.

(5) When a vote is taken in accordance with the preceding paragraph the founders, subscribers and acquirers from whom the company should receive non-cash contributions may not vote in their own name or as representatives. Exclusion from voting shall only apply to those persons who the re-examination of the founders’ report concerns.

(6) If a majority is not achieved the formation shall not be successful unless the founders or other persons at the session of the general meeting acquire all the shares of those who voted against the formation and stated that they did not wish to participate in the company as shareholders. At the same time the persons acquiring the shares must pay to the competent notary all due payments and sign or complete the subscription forms.

(7) If a vote on the formation of the company is not necessary according to the report by the commissioners , the costs of the re-examination shall be borne jointly and severally by those who required the re-examination, and in every other case by the founders.

Section 4

LEGAL RELATIONSHIP BETWEEN A COMPANY AND ITS SHAREHOLDERS

Article 221

The principle of equal status of shareholders

The bodies of the company must treat the shareholders equally under equal conditions.

Article 222

Principal obligation of shareholders

The shareholders must pay the issue value for the subscribed shares to the account of the company or deliver non-cash contributions to it.

Article 223

Consequences of late payment

**(1) **Shareholders must pay in their contributions when called upon to do so by the management. The call shall be published.

(2) Shareholders who do not pay their contributions on time shall have to pay penalty interest at a rate determined by law, unless a higher interest rate is determined in the articles of association.

(3) The articles of association may also set a contractual penalty for contributions that are not paid in on time.

Article 224

Exclusion of shareholders for late payment

(1) Shareholders who do not pay in their contribution on time may be given an additional period together with a warning that their shares and any payments made will be taken from them upon the expiry of this period. The extended period must be published and notified to each shareholder by registered post.

(2) Shareholders who do not pay in their contribution in spite of being called upon to do so once again shall have their shares and any payments made withdrawn from them and credited to the company. The data on withdrawal of the shares shall be announced together with a statement as to their characteristics.

(3) In place of the withdrawn share certificate new ones shall be issued, which must state the outstanding amount as well as the partial payments already made.

(4) An excluded shareholder shall be liable to the company for the unpaid contribution if the company does not receive payment of this contribution as set out in Article 225 of this Act.

Article 225

Payment liability of predecessors

**(1) **Each predecessor of an excluded registered shareholder entered in the share register must pay the contribution to the company if it cannot be demanded from his successors.

When it calls for payment from an excluded shareholder the company shall notify his predecessor.

(2) Each predecessor must pay only the sums, which the company demands within two years of the day when the transfer of a share is reported for entry in the share register. A new certificate shall be delivered after payment of the contribution.

(3) If payment of a contribution cannot be recovered from predecessors, the company must immediately sell the share on the stock exchange or by some other common method.

Article 226

Ban on exempting shareholders from obligations

**(1) **Shareholders and their predecessors may not be exempted from payment of obligations under Article 222 and 225 of this Act.

(2) Shareholders may only be exempted from the obligation to pay contributions in the event of a regular reduction in the subscribed capital or a reduction in the subscribed capital through the withdrawal of shares up to the amount by which the subscribed capital is reduced.

Article 227

Ban on returning and paying interest on contributions

(1) Contributions may not be returned and may not bear interest.

(2) The following shall not be considered to be repayment of contributions:

– the payment of a share of the profit for appropriation in accordance with this Act;

– payment for the purpose of a permissible acquisition of own shares in accordance with this Act.

(3) It shall in particular be impermissible to make payments for contributions or services of a shareholder or companies affiliated with a shareholder which exceed their real value, irrespective of whether the payment is made to the shareholder or to the company affiliated with the shareholder or to a third party by order of the shareholder (concealed payment of profit).

(4) The provisions of Articles 498 and 499 of this Act shall apply mutatis mutandis to shareholders with more than 25 per cent of the voting shares in respect of loans to the company instead of own capital.

Article 228

Additional obligations of shareholders

(1) The articles of association may determine that in addition to making a contribution to the subscribed capital a shareholder must perform additional services for payment or without payment. This obligation may only be specified if the permission of the company is required for the transfer of shares. The obligations of shareholders and the extent of those obligations shall be stated on the shares or interim certificates.

(2) The articles of association may specify a contractual penalty for failure to fulfil or for incorrectly fulfilling additional obligations.

Article 229

Ban on a company subscribing to its own shares and on acquisition of shares

**(1) **A company may not subscribe to its own shares.

(2) A dependent company may not acquire the shares of the dominant company, and a majority-owned company may not acquire the shares of the company which has a majority share in it, neither as a founder nor upon an increase in the subscribed capital, and nor in the event of a conditional increase in the subscribed capital. Any acquisition of shares in contravention of this provision shall be null and void.

(3) Anyone who, when a company is formed or when the subscribed capital is increased, acquires shares for the account of a company, a controlled company or a majority-owned company may not appeal to the fact that he did not receive them for his own account. Until he acquires the shares for his own account he shall not derive any rights from them.

(4) If, when the subscribed capital is increased, shares are subscribed to in contravention of the provisions of the first and second paragraphs of this article, all the members of the management shall be liable for the entire payment unless they prove that they are not culpable for the contravention.

Article 230

Use of net profit and profit for appropriation

(1) If a company discloses a net profit in the financial year it must first use it for the following purposes and in the following order:

1. to cover a loss brought forward;

2. to create statutory reserves under the fourth paragraph of Article 64 of this Act;

3. to create reserves for own shares under the fifth paragraph of Article 64 of this Act;

4. to create reserves under the articles of association under the seventh paragraph of Article 64 of this Act.

(2) The use of the profit for the purposes set out in the first paragraph of this article must be taken into account by the management when it compiles the annual report.

(3) When they adopt the annual report the management or the supervisory board may use the amount of net profit remaining following its use for the purposes set out in the first paragraph of this article to create other profit reserves, but may not use for this purpose more than half of the amount of net profit remaining following the use of the profit for the purposes set out in the first paragraph of this article. The articles of association may authorise the management or the supervisory board to use for the purpose set out in this paragraph a part which is greater than half of the amount of net profit remaining after the use of the profit for the purposes referred to in the first paragraph of this article. If the shares of a company are not traded on the regulated market the articles of association may also limit the authorisation of the management or the supervisory board referred to in the first sentence of this article in such a way that the management or the supervisory board may only use a part which is less than half of the amount of net profit remaining after the use of the profit for the purposes set out in the first paragraph of this article. If the articles of association authorise the management or the supervisory board to use for the purpose set out in the first sentence a part which is greater than half of the amount of net profit remaining after the use of the profit for the purposes referred to in the first paragraph of this article, this authorisation shall not apply in the case where other profit reserves have already reached half of the subscribed capital or when other profit reserves would exceed half of the subscribed capital if the authorisation under the articles of association to create profit reserves were used.

(4) When the decision on the adoption of the annual report is made in accordance with this Act by the general meeting it may decide, upon adopting it, to create other profit reserves from the amount of net profit remaining after the use of the profit for the purposes referred to in the first paragraph of this article, but for this purpose the general meeting may not use more than half of the net profit remaining after its use for the purposes referred to in the first paragraph of this article.

(5) The use of the profit for appropriation shall be decided by the general meeting.

(6) In its resolution on the use of the profit for appropriation the general meeting may decide that an additional amount shall be transferred to the other profit reserves in addition to any amounts under the third or fourth paragraph of this article. If the articles of association provide that the profit for appropriation may be used for other purposes (for example, payments to the mployees, members of the management board or members of the supervisory board), the general meeting may decide in a resolution on the use of profit for appropriation that the profit for appropriation shall also be used for these other purposes set out in the articles of association.

(7) Shareholders shall have the right to a share in the profit for appropriation unless the general meeting has decided in a resolution on the use of the profit for appropriation in accordance with the law or the articles of association that the profit for appropriation shall be used for the purposes referred to in the sixth paragraph of this article or that the profit for appropriation shall not be distributed to the shareholders (profit brought forward).

(8) Prior to the liquidation of a company only the profit for appropriation may be distributed to the shareholders.

Article 231

Distribution of the profit for appropriation to the shareholders

(1) The shareholders’ shares in the profit for appropriation shall be determined in proportion to their share in the subscribed capital.

(2) If contributions to the subscribed capital are not paid up in full or are not paid up for all shares in the same proportion, the shareholders’ shares in the profit for appropriation shall be determined in proportion to the payments made. Contributions paid in during the financial year shall be taken into account in proportion to the period from when they were paid until the end of the financial year.

(3) A different basis for participation by the shareholders in the profit for appropriation shall only be permitted where provided by law or in the articles of association in accordance with the law.

Article 232

Interim dividends

(1) In accordance with the articles of association the management may be authorised to pay an interim dividend based on the anticipated profit after the end of the business year.

(2) The management may only pay interim dividend if the previous account for the previous business year shows net profit. (2) A maximum of half the amount remaining from the anticipated net profit after profit reserves have been set aside in accordance with the law or the articles of association may be paid out as an interim dividend. Moreover, the amount of interim dividends shall not exceed half of the balance sheet profit from the previous year.

(3) The payment of interim dividends must be approved by the supervisory board.

Article 233

Return of illegal payments

**(1) **Shareholders must return to the company any payments which they received from the company in contravention of this Act. If such payments were received in the form of dividends the obligation to return them shall only apply if the shareholders knew or should have known that they were not entitled to receive these payments. Shareholders whose combined shares amount to at least one-tenth of the subscribed capital or a whose lowest issue value reaches at least 400,000 euros may pursue such claim of the company, whereby Article 328 of this Act shall apply mutatis mutandis and a prior resolution of the general meeting shall not being required.

(2) Claims of the company under the preceding paragraph may also be pursued by the company’s creditors if the company is unable to pay them. If bankruptcy proceedings are commenced the rights of the company’s creditors in respect of the shareholders shall be exercised by the bankruptcy administrator.

(3) Repayment claims shall be time-barred after five years from the date on which the payment was received.

Article 234

Payment for additional services

For additional services which shareholders are obliged to perform in accordance with the articles of association in addition to their contribution to the subscribed capital they may receive a payment which may not exceed the value of the service irrespective of whether a profit is recorded.

Article 235

Entry in the share register

**(1) **Registered shares shall be entered in the share register together with the holder’s designation or the name, surname and address of the holder.

(2) For registered shares, in relations with the company the shareholder shall be the person entered in the share register as the shareholder.

(3) If in the opinion of the company a person is wrongly entered in the share register as a shareholder, the company may delete the entry only if it advises the shareholder in advance of its intention to delete the entry and gives the shareholder a period within which to object. If the shareholder lodges an objection in time he may not be deleted from the share register.

(4) Every shareholder shall be given access to the share register upon request.

(5) The provisions laid down in the preceding paragraphs shall also apply to interim certificates.

Article 236

Transfer of registered shares

**(1) **Registered shares shall be transferred by endorsement. The regulations on bills of exchange shall apply mutatis mutandis to an endorsement. A separate law shall apply to the transfer of registered shares issued in book-entry form.

(2) The articles of association may limit the transferability of registered shares by determining, in accordance with this Act, that such transfer requires the permission of the company (hereinafter referred to as: “permission for the transfer of shares”). A decision on the permission for the transfer of shares shall be made by the company’s management. The articles of association may determine that the decision on the permission for the transfer of shares shall be made by the company’s supervisory board or the general meeting.

(3) If registered shares are transferred to another person the transfer must be notified to the company and the transfer must be proved. The company shall record the transfer in the share register.

(4) The provisions laid down in the preceding paragraphs shall also apply to interim certificates.

Article 237

Permission for the transfer of shares not traded on the regulated market

(1) When registered shares are not traded on the regulated market and the articles of association stipulate that the company’s permission is required in order to transfer these shares the articles of association must lay down the good reasons why the company may decline to give permission to their transfer.

(2) The good reasons under the first paragraph of this article shall be reasons which, taking into account the company’s shareholder structure, justify the refusal to permit the transfer of shares in cases when such transfer could jeopardise the achievement of the company’s goals or its economic independence.

(3) The company may require persons who would acquire shares on the basis of permission for the transfer of shares to state whether they intend to acquire the shares in their own name and for their own account. In such case the company may also refuse to give permission for the transfer of shares if persons who would acquire the shares on the basis of permission for the transfer of shares do not state explicitly that they intend to acquire the shares in their own name and for their own account.

(4) When the legal basis for an acquisition of shares is inheritance, division of community property of spouses or a sale carried out in a compulsory execution procedure the company may refuse to give permission for a transfer of shares only if it offers to acquire the shares from the acquirer against payment of their market value.

(5) If the acquirer does not reject an offer to acquire shares under the fourth paragraph of this article within one month of receiving the offer it shall be deemed that the acquirer has accepted the offer.

(6) If the acquirer does not agree with the payment offered for acquisition of shares under the fourth paragraph of this article the market value shall be determined upon a proposal from the acquirer by the competent court.

(7) In respect of the transfer of registered shares not traded on the regulated market the articles of association may not lay down stricter conditions than the conditions laid down in this article and in Article 238 of this Act.

Article 238

The effect of the permission for the transfer of shares not traded on the regulated market

(1) Until the company issues permission for the transfer of shares not traded on the regulated market the acquirer of these shares shall not have any rights deriving from these shares in relations with the company.

(2) Notwithstanding the first paragraph of this article, an acquirer who acquires shares on the basis of inheritance, division of community property of spouses or a sale carried out in a compulsory execution procedure shall acquire the property rights deriving from the shares at the moment they are acquired and the management rights only on the basis of the permission from the company for the transfer of the shares.

(3) If the company fails to decide on permission for the transfer of shares within three months of receiving a request from the acquirer or if the company refuses to give permission for the transfer of shares without justification it shall be deemed that permission has been given.

(4) If the company refuses a request from an acquirer in violation of this Act the acquirer shall acquire rights deriving from the shares on the date the court ruling instructing the company to issue permission for the transfer of shares becomes final. In such case the company must also compensate the acquirer for damage incurred as a result of the unjustified refusal to issue permission for the transfer of shares.

Article 239

Permission for the transfer of shares traded on the regulated market

(1) When registered shares are traded on the regulated market and the articles of association stipulate that the company’s permission is required in order to transfer these shares the only circumstance which the articles of association may determine as a substantiated reason for refusal to give permission for their transfer is that with the acquisition of these shares together with the shares already held by the acquirer prior to the acquisition the acquirer would exceed a certain proportion of the voting rights or a certain proportion in the capital of the company.

(2) The company may require the acquirer to state whether he intends to acquire the shares in his own name and for his own account. In such case the company may also refuse to give permission for the transfer of shares if the acquirer does not state explicitly that he acquired the shares in his own name and for his own account.

(3) When the legal basis for an acquisition of shares is inheritance, division of community property of spouses or a sale carried out in a compulsory execution procedure the company may not refuse to give permission for the transfer of shares.

(4) In respect of the transfer of registered shares traded on the regulated market the articles of association may not lay down stricter conditions than the conditions laid down in this article and in Article 240 of this Act.

Article 240

The Effect of the permission for the transfer of shares traded on the regulated market

(1) An acquirer of registered shares traded on the regulated securities market whose transfer is restricted in accordance with the first paragraph of Article 233c of this Act shall acquire property rights deriving from the shares at the moment they are acquired and the management rights only on the basis of the permission from the company for the transfer of the shares.

(2) Until the company issues permission for the transfer of shares the acquirer may not, on the basis of these shares, exercise voting rights nor other rights associated with voting rights but may exercise all other rights deriving from these shares, including the priority right to subscribe to new shares.

(3) Until the company issues permission for the transfer of shares the voting rights deriving from these shares shall be deemed to be unrepresented in the general meeting.

(4) If the company does not refuse a request from the acquirer for permission for the transfer of shares within 20 days of receiving the request it shall be deemed that it has given its permission.

(5) If the company refuses a request from an acquirer in violation of the provisions of this Act the acquirer shall acquire voting rights deriving from the shares on the date the court ruling instructing the company to issue permission for the transfer of shares becomes final. In such case the company must also compensate the acquirer for damage incurred as a result of the unjustified refusal to issue permission for the transfer of shares.

Article 241

Legal community and shares

(1) If a share belongs to several entitled persons the rights deriving from the share shall be exercised by a joint representative.

(2) All entitled persons shall by jointly and severally liable for liabilities arising from the share.

(3) If the company must express its will to a shareholder and if the entitled persons have not appointed a joint representative it shall be sufficient for the company to express its will to one of the entitled persons.

Article 242

Calculating the ownership time of a share

(1) If the exercise of rights deriving from a share is conditioned on the shareholder having held the share for a certain period of time, the ownership time of the share shall be counted from the time the claim for the transfer of the share which the shareholder has on a financial organisation matures.

(2) The ownership time of a legal predecessor shall be attributed to a shareholder if he acquired the share without payment as the universal legal successor or upon the division of common assets.

Article 243

Annulment of shares in accordance with the amortisation procedure

If a share or interim certificate is lost or destroyed the document may be annulled in accordance with the regulations on the amortisation of securities.

Article 244

Annulment of shares

**(1) **If the content of a share certificate becomes incorrect owing to a change in legal circumstances the company may, with permission from the court, annul those shares which it has not received despite calling for them to be amended or exchanged. If the share documents are incorrect owing to a change in the nominal value of the shares, they shall only be annulled if the nominal value is reduced in order to reduce the subscribed capital. Registered shares may not be annulled because the shareholder’s designation has become incorrect.

(2) A call for shares to be delivered must refer to the permission of the court to annul the shares. The annulment may only be carried out if the call was published as laid down in the first paragraph of Article 224 of this Act. The annulment shall become valid upon publication. In the publication the annulled shares shall be designated in such manner that it can be seen unambiguously that the share has been annulled.

(3) In place of annulled shares new shares shall be issued which shall be delivered to the entitled person or stored, and the court which approved the annulment of the shares shall be notified of this.

Article 245

Exchange of a damaged document

If a share or interim certificate is damaged to the extent that it is no longer appropriate for circulation, but the essence of its content is still legible, the entitled person may require the company to issue a new document to him at his expense and he shall deliver the old document to the company.

Article 246

New coupon sheet

A new coupon sheet or new coupons shall only be delivered to the holder if he submits the renewal coupon and the bare shell of the share.

Article 247

Acquisition by a company of its own shares

(1) A company may only acquire its own shares:

– if the acquisition is necessary in order to prevent serious and immediate damage being caused to the company;

– if the shares have to be offered for sale to the employees of the company or of an affiliated company;

– if it acquires the shares in order to provide compensation for the shareholders in accordance with this Act;

– if it acquires the shares without payment;

• if a bank, insurance company and another financial organisation obtains shares with the purchase committee;

– on the basis of universal legal succession;

– on the basis of a resolution by the general meeting on the withdrawal of shares in accordance with the provisions on reduction of the subscribed capital;

– on the basis of authorisation from the general meeting for the purchase of its own shares, which shall be valid for 18 months and shall determine the minimum and maximum purchase price for the acquisition of these shares, as well as the proportion of the shares, which may not exceed 10 per cent of the subscribed capital. The company may not acquire its own shares exclusively for trading purposes. The provisions of Article 221 of this Act shall apply in respect of the acquisition and disposal of a company’s shares. It shall be presumed that an acquisition or disposal of a company’s own shares is in accordance with Article 221 of this Act if it was carried out on the basis of a transaction concluded on the regulated market. A disposal of a company’s own shares in some other manner may only be determined by a general meeting resolution.

The provisions of Article 337 and the first paragraph of Article 344 of this Act shall apply mutatis mutandis in respect of the acquisition and disposal of a company’s shares.

The general meeting may also authorise the management to withdraw the company’s own shares without a further decision on a reduction in the subscribed capital.

(2) The total proportion of the shares acquired for the purposes set out in the first three indents and the eighth indent of the preceding paragraph, together with its other own shares which the company already holds, may not exceed 10 per cent of the subscribed capital. Such acquisition by a company of its own shares shall only be permitted if the company acquires the shares by creating reserves for own shares without reducing the subscribed capital or reserves prescribed by law or the articles of association which may not be used for payments to shareholders and provided the full issue value has been paid for the shares. In the cases set out in the first, second, fourth, fifth and eight indents of the preceding paragraph the acquisition shall only be permitted if the full issue value is paid up for the shares.

(3) In the case under the first and the eighth indents of the first paragraph of this article the management must report on the reasons for and the purpose of the acquisition, on the total number and the lowest issue value of the shares and on the value of the shares at the next general meeting. In the case under the second indent of the first paragraph of this article the shares shall be offered for sale to the company’s employees within one year of their acquisition.

(4) A legal transaction on the acquisition of a company’s own shares which is in violation of the first or second paragraph of this article shall be null and void and the acquisition of the shares by the company shall be invalid.

Article 248

Fictitious transactions

(1) A legal transaction by means of which a company secures an advance or a loan for the acquisition of shares shall be null and void.

(2) The provision laid down in the preceding paragraph shall not apply to the current legal transactions of financial organisations nor to transactions by means of which the employees of a company or of an affiliated company acquire shares. Such legal transaction shall be null and void if the company would be unable to form a fund of its own shares without reducing the subscribed capital or a fund prescribed by law or the articles of association which may not be used for payments to shareholders.

(3) A legal transaction between a company and another person in accordance with which the other person would be entitled to acquire shares in the company for the account of the company or a dependent company or a company in which the company has a majority share if the company would acquire the shares in contravention of the provisions laid down in the preceding article shall also be null and void.

Article 249

Rights deriving from a company’s own shares

The company shall derive no rights from its own shares.

Article 250

Disposal and withdrawal of a company’s own shares

(1) If a company has acquired its own shares in contravention of the provisions of Article 247, paragraphs 1 and 2, of this Act, it must dispose of them within one year of the acquisition.

(2) If the total proportion of shares which a company has acquired in accordance with the provisions of the first and second paragraphs of Article 247 of this Act and are already in company’s possession exceeds 10 per cent of the subscribed capital, the company must dispose of the part of the shares exceeding this percentage within three years of the acquisition.

(3) If a company fails to dispose of its own shares within the time limits laid down in the first and second paragraphs of this article, it must withdraw them.

Article 251

Acquiring a company's own shares through third persons

Anyone operating in their own name but for the account of a company may only acquire or hold shares in the company if this is permitted by the company in accordance with Article 247, paragraph 1, indents one to six and eight, and paragraph 2 of this Act. The same shall apply if shares in the company are acquired or held by a dependent company or a company in which the company has a majority interest, and also if the shares are acquired or held by a third person operating in his own name but for the account of a dependent company or a company in which it has a majority interest. After calculation of the entire proportion of shares in accordance with the second paragraph of Article 247 and Article 250 of this Act, these shares shall be deemed to be shares of the company. The third person or company must sell the shares to the company at its request.

Article 252

Acquisition of a company’s own shares in pledge

(1) A company’s own shares within the meaning of Articles 247 and 251 of this Act shall also include the company’s shares which the company receives in pledge. A financial organisation may, as part of its current operations, receive its own shares in pledge up to the total proportion laid down in the second paragraph of Article 247 of this Act.

(2) If a company receives its own shares in pledge in contravention of the provisions of the preceding paragraph, such acquisition shall be invalid if the issue value has not yet been fully paid in for them. A transaction under law of obligations on the receipt of a company’s own shares in pledge shall be null and void if the shares are acquired in contravention of the preceding paragraph.

Section 5

THE BODIES OF A PUBLIC LIMITED COMPANY

**Subsection 1 **

Common provisions for management and supervisory bodies

Article 253

Selection of management system

(1) The management and supervisory bodies shall be the management board, the board of directors and the supervisory board.

(2) A company may choose a two-tier management system by appointing a management board and a supervisory board or a one-tier management system by appointing a board of directors.

Article 254

Composition and number of members

**(1) **The composition and the number of members of the management or supervisory bodies shall be determined by law and the articles of association.

(2) The management or supervisory bodies shall be composed of at least three members, unless otherwise provided by law.

(3) If a management or supervisory body has more employees, one of them shall be appointed president.

Article 255

Appointment and term of office of the members

(1) The members of the management and supervisory boards shall be appointed for a period determined in the articles of association which may not be longer than six years, with the possibility of reappointment.

(2) Any natural person with legal capacity may be a member of a management or supervisory body, other than a person:

– who is a member of another management or the supervisory body of such company;

• who has not been finally convicted of a criminal offence against the economy, against labour relations and social security, against legal transactions, against property, against environment, space and natural resources. Such a person cannot be appointed to the Supervisory Board within five years as of the finality of judgement and two years after having served the sentence;

– against whom a security measure has been passed prohibiting the pursuit of a profession, for the duration of the prohibition; or

• who, acting as a member of the management board of a company against which bankruptcy proceedings were instituted, has been pronounced liable to repay damage to the creditors in accordance with the law regulating the financial operations of companies for the period of two years after the court ruling became final.

(3) New members of the management or supervisory bodies shall – together with the application for registration – submit a written statement about the non-existence of circumstances that would contradict their appointment pursuant to the this act.

Article 256

Appointment by the court

If for any reason one or more of the members of the management or supervisory body are not appointed, in cases of urgency that member shall be appointed by the court upon a proposal from interested persons. The position of a court-appointed member of the management or supervisory body shall cease when a new member is appointed in his place in accordance with the articles of association. Court-appointed members of the management or supervisory body shall be entitled to receive payment for their work and reimbursement of costs. If a court-appointed member of the management or supervisory body and the company cannot agree on the amount of costs and payments, the court shall decide on those costs and payments.

Article 257

Adoption of decisions

**(1) **The management or supervisory body must be convened at least once in each quarter or shorter period, as stipulated by the articles of association.

(2) Each member of the management or supervisory body shall have one vote.

(3) The management or supervisory body shall have a quorum to pass resolutions if at least half of its members are present when a decision is taken, unless otherwise provided by the articles of association.

(4) A majority of the votes cast shall be required for a resolution by the management or supervisory body to be valid, unless otherwise provided by law. In the event of an equal number of votes the president of the management or supervisory body shall have the casting vote, unless otherwise provided in the articles of association.

(5) A member of the management or supervisory body may not participate in decisionmaking on matters referring to him.

(6) Members of the management or supervisory body or their authorised persons shall be entitled to participate in the adoption of decisions by delivering written ballots to another member of the management or supervisory body.

(7) A management or supervisory body may adopt decisions through a correspondence session, via telephone, electronic media or otherwise, if this is agreed by all the members of the management or supervisory body, unless otherwise provided by the articles of association or the rules of procedure.

Article 258

Rules of procedures

**(1) **The management or supervisory body shall adopt the rules of procedure with the majority of votes cast by its members.

(2) Individual issues concerning the work of the management or supervisory body shall be determined by the articles of association.

Article 259

Participating in sessions

Persons who are not members of the management or supervisory body shall not be allowed to participate at the sessions of the management or supervisory body, unless otherwise provided by the articles of association. Experts or rapporteurs may be invited to participate in the deliberation of particular items.

Article 260

Convening sessions

(1) If requested by any member of the management or supervisory body who must also state the purpose and reasons for the convocation, the president or chairperson shall be obliged to convene the session immediately. A session must be held within two weeks of being convened.

(2) If the president or chairperson does not accept the request stated in the previous paragraph, at least two members of the management or supervisory body may convene a session of the management or supervisory body by themselves and propose the agenda.

**Article 261 **

Approval of a loan

**(1) **A company may only approve loans to members of the management or supervisory body and the procurators on the basis of a resolution passed by the management or supervisory body. A separate resolution shall be passed for each loan or for each type of loan and must state the manner in which interest is charged and the time limit for repayment of the loan. Other legal acts which correspond in a business sense to a loan shall also be deemed to be loans.

(2) A loan contract based on a resolution referred to in the preceding paragraph must be concluded no later than three months after the adoption of the resolution.

(3) The provisions laid down in the preceding paragraphs shall also apply mutatis mutandis to cases where a loan is approved by a dominant company or a dependent company, whereby the resolution approving the loan is adopted by the management or supervisory body of the dominant company, and in cases where the recipient of the loan is a family member of the member of the management or supervisory body or the procurator.

(4) If a loan is approved in contravention of the provisions laid down in the preceding paragraphs, the sum received must be returned immediately unless the management or supervisory body subsequently approves the loan.

Article 262

Contract with a member

(1) The rights and obligations of a member of the management or supervisory body not stipulated hereby shall be defined in a contract concluded with the company.

(2) Such contract must be approved by the management or supervisory body; otherwise, the member of the management or supervisory body must return the benefits arising therefrom.

Article 263

Diligence and responsibilities

(1) In performing their tasks on behalf of the company, the members of the management or supervisory body must act with the diligence of a conscientious and fair manager and protect the business secrets of the company.

(2) The members of the management or supervisory body shall be jointly and severally liable to the company for damage arising as a consequence of a violation of their tasks, unless they demonstrate that they fulfilled their duties fairly and conscientiously.

(3) Members of the management or supervisory body shall not have to reimburse the company for damage if the act that caused damage to the company was based on a lawful resolution passed by the general meeting. The damage liability of the members of the management shall not be excluded on the basis that an act was approved by the management or supervisory body. The company may only refuse compensation claims or offset them three years after the claims arose provided the agreement of the general meeting is obtained and provided no written objection is made by a minority holding at least one-tenth of the subscribed capital.

(4) A compensation claim by the company against members of the management or supervisory body may also be pursued by creditors of the company if the company is unable to repay them.

Article 264

**Damage liability arising from the influence of third persons **

**(1) **Persons who use their influence on a company to induce a member of the management or supervisory body, the procurator or a proxy to act in a manner which causes damage to the company or its shareholders must reimburse the company for the resulting damage. Shareholders shall be reimbursed for damage if they suffered damage, irrespective of the damage that was caused to them through the damage caused to the company.

(2) In addition to the members of the management or supervisory body anyone who derived benefits from the damaging action, if such action was committed intentionally, shall also be jointly and severally liable. A compensation claim of the company may also be pursued by the company’s creditors if the company is unable to repay them.

(3) The provisions laid down in the preceding paragraphs shall not apply if the member of the management or supervisory body, the procurator or the proxy was committed to the damaging action in the exercise of:

• a voting right at the General Meeting,

– an management entitlement based on a controlling contract, or

– a management entitlement a principal company in which the company is incorporated.

Subsection 2

Management board

Article 265

Management of the company

(1) The management board shall manage a company independently and on its own responsibility.

(2) The management board may have one or more members (managers ).

(3) If the management board has more than one member the members shall adopt the decisions unanimously, unless otherwise provided in the articles of association.

(4) The articles of association may not provide that in the event of a difference of opinion the vote of a particular member or particular members shall prevail over the majority.

Article 266

Presentation and representation

(1) The management board shall represent the company.

(2) If the management board has more than one member the members shall represent the company jointly, unless otherwise provided in the articles of association.

(3) In the case of joint representation an expression of will given to any of the members of the management board shall take effect against the company as a whole if they are all authorised together.

(4) The articles of association, or the supervisory board where so envisaged by the articles of association, may provide that members of the management board individually, or at least two members of the management board together, or a single member of the management board together with the procurator are authorised to represent the company.

Article 267

Powers and obligations of the management board in respect of the general meeting

The powers and obligations of the management board in respect of the general meeting shall be:

– to prepare measures within the competence of the general meeting at the request of the general meeting;

– to prepare contracts and other acts which require the consent of the general meeting in order to be valid; and

– to carry out resolutions adopted by the general meeting.

Article 268

Appointment and recall of the management board

(1) The members of the management board shall be appointed by the supervisory board.

A reappointment may not be made earlier than one year prior to the expiry of the term of office of the management board.

(2) The supervisory board may recall a particular member of the management board or the president:

– if he is in serious breach of obligations,

– if he is incapable of business conduct,

– if the general meeting passes a vote of no confidence in him, except where the vote of no confidence was passed for clearly unsubstantiated reasons, or

– for other economic and business reasons (significant changes in the shareholder structure, reorganisation, etc.).

Article 269

Participation by members of the management board in the profit

**(1) **The articles of association may provide that members of the management board share in the profit in exchange for their work.

(2) As a rule the level of the share in the profit shall be set as a percentage of the annual profit of the company.

Article 270

Income of members of the management board

(1) In determining the total income of a particular member of the management board (salary, profit share, reimbursement of costs, insurance premiums, commissions, other additional payments), the supervisory board must ensure that the total income is proportional to the tasks carried out by members of the management board and the financial position of the company.

(2) If, after the income has been determined, the operations of the company deteriorate to an extent that threatens the economic position of the company or could cause damage to the company, the supervisory board may lower the income. Any such lowering of income shall not affect the other provisions of the contract; a member of the management board shall have the right to a termination of contract at the end of the following quarter with two months notice.

Article 271

Ban on competition

A member of the management board may not pursue an activity with a view to profit in the area of the company’s activity without the consent of the supervisory board, nor conclude operations for his own account or for the account of another person.

Article 272

Reporting to the supervisory board

(1) The management board shall report to the supervisory board at least once every quarter on:

– planned business policies and other general questions concerning operations;

– the profitability of the company, and particularly the return on capital;

• the progress of operations, and particularly the turnover and the financial position of the company;

– operations which may have a significant impact on the profitability or solvency of the company.

(2) The supervisory board may also require a report on other issues. The management board shall inform the supervisory board about issues concerning the operations of the company and affiliated companies.

(3) The management board shall submit to the supervisory board the annual report immediately after it has been drafted. If it needs to be audited it shall be submitted together with an audit report. The management board must attach to the annual report the proposal for the use of the profit for appropriation which it will submit to the general meeting.

(4) The supervisory board may at any time require from the management board a report on issues related to the operations of the company which have an important impact or which can be expected to have an important impact on the position of the company.

(5) The reports must conform to the principles of conscientiousness and reliability.

3. Subsection 3

Supervisory board

Article 273

Special conditions for members of a supervisory board

(1) A member of a supervisory board may not be:

– a member of the management board or board of directors of a dependent company of the company;

– a procurator or authorised person of the same company;

– a member of the management board of another company with share capital in which a member of the management board of this company is on the supervisory board;

• a person who is a member of a supervisory or management board in three other companies, or

• a person not fulfilling the conditions laid down in the articles of association.

(2) For a maximum period of one year the supervisory board may appoint its member to deputise for missing or absent members of the management board. During that time, they may not act as members of the supervisory board. Reappointment or extension of term of office shall be permitted provided the entire term of office is not longer than one year.

Article 274

Electing members of the supervisory board

**(1) **Members of the supervisory board representing the interests of the shareholders shall be elected by the general meeting.

(2) The articles of association may provide that a maximum of one-third of the members of the supervisory board representing the interests of shareholders shall be appointed by the holders of registered shares whose transfer requires the permission of the company. Such shares shall not constitute a separate class of shares.

Article 275

Recall of members of the supervisory board

(1) The general meeting may recall the members of the supervisory board that it has elected before the expiry of their term of office. A majority of at least three-quarters of the votes cast shall be required in order to pass a resolution recalling a member of the supervisory board. The articles of association may stipulate a larger majority and lay down other requirements.

(2) A member of the supervisory board who has been appointed to the supervisory board by the qualified shareholders in accordance with the second paragraph of the previous article may be recalled by the shareholders at any time and replaced by another member.The general meeting may recall such member by ordinary majority of votes if the right to appointment is terminated.

Article 276

Appointment and recall of a member of the supervisory board by the court

(1) The management board must submit a proposal for the appointment of a member of the supervisory board to the court immediately after it establishes that the number of members is insufficient and does not guarantee quorum.

(2) Where good reasons exist the court shall recall a member of the supervisory board at the proposal of the supervisory board or shareholders whose shares account for at least 10% of the subscribed capital.

Article 277

Announcement of changes in the supervisory board

The management board must immediately announce any change in the membership of the supervisory board and notify the change for entry in the register.

Article 278

Operations of the supervisory board

(1) The supervisory board must elect a chairman and at least one deputy from among its members. The management board must notify the name and surname of the chairman and the deputy for entry in the register. The deputy shall assume the rights and obligations of the chairman only if the latter is in no capacity to exercise them.

(2) Minutes shall be kept of sessions of the supervisory board and shall be signed by the chairman or the deputy.

Article 279

Committees

(1) The supervisory board may appoint one or more committees, for example the audit committee, the appointment committee, the remunerations committee who shall review the proposed resolutions of the supervisory board and take care of their implementation, as well as perform other expert tasks.

(2) A committee may not decide on issues which are within the competence of the supervisory board.

(3) A committee shall be composed of a president and at least two members. The supervisory board shall appoint a president from among its members.

(4) Only the members of a committee may participate at the sessions, unless otherwise provided for by the articles of association or the rules of procedure of the supervisory board. Experts or rapporteurs may be invited to participate in the deliberation of particular items at the session of a committee.

(5) The provisions of Article 257 of this Act shall apply mutatis mutandis to decision making by the committee:

(6) The committee shall report on its work to the supervisory board.

Article 280

**Audit committee **

**(1) **If the supervisory board appoints an audit committee, at least one member must be appointed from among the independent experts in the field of accounting or finance. Besides them, only the members of the supervisory board can be appointed members of the audit committee.

(2) The audit committee shall have the following tasks:

• supervision of compliance of the financial information issued by the company;

• supervision of the functioning of the risk management system, internal audit and the system of internal controls;

– estimate of the composition of the annual report, including the formation of the proposal for the supervisory board;

• cooperation in determining the important segments to be audited;

• cooperation in selecting the independent auditor and preparing the agreement between the auditor and the company;

• monitoring the independence, impartiality and effectiveness of the external auditors;

• supervising the nature and scope of non-auditing activities; and

• other tasks defined by the articles of association or a resolution adopted by the management board.

Article 281

(Competences of the Supervisory Board)

**(1) **The supervisory board shall supervise the company’s business conduct.

(2) The supervisory board may examine and verify the books and documents of the company, its cash box, stored securities, stocks of goods and other things.

(3) The supervisory board may request form the management board any information needed for implementing supervision. Any individual member of the supervisory board may also request to be issued such information and the management board must submit the required information to the supervisory board as a body, if so provided by the articles of association.

(4) The supervisory board may convene a general meeting.

(5) Business conduct may not be transferred to the supervisory board. The articles of association or the supervisory board may, however, determine that certain types of operations may only be carried out with its consent. If the supervisory board refuses to give its consent, the management board may require the general meeting to determine whether to give consent. A majority of three-quarters of the votes cast shall be required for a resolution by the general meeting to grant consent.

Article 282

Powers of the supervisory board in connection with the annual report

(1) The supervisory board must examine the annual report and the proposal for the use of the profit for appropriation submitted to it by the management board. Each member of the supervisory board or the audit committee shall have the right to review and verify all the bases used for compiling the annual report, which have to be submitted to him on request unless the supervisory board decides otherwise.

(2) The supervisory board must compile a written report for the general meeting on the findings of the examination referred to in the first paragraph of this article. The report must state the method used and the extent of the examination of the management of the company during the financial year. If an audit report is also attached to the annual report the supervisory board’s report must also include an opinion on the audit report. At the end of its report the supervisory board shall state whether following the completion of its examination it has any comments in relation to the annual report and whether it confirms the annual report. If the supervisory board confirms the annual report it is thereby adopted.

(3) The supervisory board must deliver its report to the management board within one month of the submission of the annual report; otherwise the management board must give the supervisory board an additional period to comply which may not be longer than one month. If the supervisory board still fails to deliver the annual report within this additional period it shall be deemed that the supervisory board has not confirmed it.

Article 283

Representation of the company against members of the management board

The chairman of the supervisory board shall represent the company against members of the management board.

Article 284

Payment to the supervisory board members

Members of the supervisory board may receive payment or participation in the profit, as determined by the articles of association or the general meeting, for their work. Payment must be commensurate with the tasks carried out by the members of the supervisory board and the financial position of the company.

Subsection 4

Board of Directors

Article 285

(competence)

(1) The board of directors shall manage a company and supervise its operations.

(2) The provisions under Article 267 and Article 281 of this Act shall apply mutatis mutandis for the competences of the board of directors.

(3) The board of directors shall compile, verify and approve the annual report by applying mutatis mutandis the provisions of the first and the second paragraph of Article 282 hereof. It can be stipulated by the articles of association that the annual report must be passed by the general meeting.

Article 286

Presentation and representation

(1) The board of directors shall represent the company.

(2) If the board of directors appoints executive directors from among themselves, they shall present and represent the company, unless otherwise provided in the articles of association.

(3) The provisions laid down in the second to fourth paragraphs of Article 266 of this Act shall also apply mutatis mutandis to the presentation and representation.

Article 287

Special conditions for members

The fourth and fifth indents of the first paragraph of Article 273 of this Act shall apply mutatis mutandis to the conditions for the members of the board of directors.

Article 288

Elections and recall

The provisions under Articles 274 to 276 of this Act shall apply mutatis mutandis for the elections and recall of the members of the board of directors.

Article 289

Operations and remuneration of the members of the board of directors

(1) The provisions under Article 278 and Article 279 of this Act shall apply mutatis mutandis for the operations of the board of directors and its committees.

(2) The president of the board of directors may not be an executive director of the company.

(3) The board of directors must form an audit committee in a company:

• the securities of which are traded on the regulated market; or

• in which the employees exercise their right to co-operation in the company’s bodies in accordance with the law.

(4) The provisions of Article 280 hereof shall apply mutatis mutandis for the audit committee and the members of the audit committee may only be those members of the board of directors who are not executive directors.

*(5) The provisions of Article 284 of this Act shall apply mutatis mutandis to the remuneration of the members of the board of directors.

Article 290

Executive directors

**(1) **The board of directors may appoint one or more executive directors. The provision laid down in the first paragraph of Article 255 of this Act shall apply for the term of appointment. The members of the board of directors may be appointed executive directors.

(2) The board of directors must apply for the entry in the register of any such appointment and the scope of the powers of representation of an executive director as well as any change in such data.

(3) If a person who is not a member of the board of directors is appointed executive director, the provisions of Article 255 hereof shall apply mutatis mutandis for the conditions of appointment.

(4) The board of directors may assign the following tasks to the executive directors:

• management of regular operations,

• applications for registration and submission of documents to the registry;

• taking care of keeping the books of account; and

• compilation of the annual report to which, if subject to auditing, the auditor’s report and the proposal for the use of net distributable profit for the general meeting shall be attached and immediately submitted to the board of directors.

(5) In performing the tasks, the executive directors must comply with the instructions and the restrictions imposed by the general meeting, the board of directors, the articles of association and the rules of procedure of executive directors.

(6) If there are several executive directors, they shall conduct business together, unless otherwise provided in the articles of association or the rules of procedure of the board of directors.

(7) If there are several executive directors, they can adopt the rules of procedure for their work unless it is stipulated by the articles of association that such rules of procedure must be adopted by the board of directors or if they have already been adopted.

(8) The board of directors may recall an executive director at any time. The rules regulating obligation relations shall be used to decide claims based on a contract to perform the function of executive director.

(9) When signing document for the company, the executive directors shall add the note

“Executive Director” to the registered name of the company and their signature.

(10) The provisions of Article 272 hereof shall apply mutatis mutandis for the reporting by the executive directors to the board of directors, unless otherwise provided by the articles of association or the rules of procedure for the work of executive directors.

(11) The provisions laid down in Articles 261 to 264 and 269 to 271 of this Act shall apply mutatis mutandis in respect of executive directors.

Article 291

Public or small companies

(1) The board of directors of a company the securities of which are traded on the regulated market must appoint from among its members at least one executive director but not more than half members of the board of directors may be appointed executive directors. Unless otherwise provided by the articles of association, executive directors shall perform the tasks laid down in the fourth paragraph of the previous Article.

(2) The provisions laid down in the first paragraph of Article 258 and the second paragraph of Article 289 of this Act shall not apply to small companies.

Subsection 5

General meeting

Division 1

Powers of the general meeting

Article 292

General

(1) The shareholders shall exercise their rights in respect of matters concerning the company at a general meeting, unless otherwise determined by this Act.

(2) Members of the management or supervisory body may participate in the general meeting even if they are not shareholders. The articles of association or the rules of procedure of the general meeting may define in which cases the members of the management or supervisory body can participate in the general meeting through image and voice transfer and in which cases the general meeting can be transmitted through audio and video channels.

Article 293

Powers of the general meeting

(1) The following matters shall be decided by the general meeting:

– the adoption of the annual report;

– the use of the profit for appropriation;

– the appointment and recall of members of the supervisory board and the board of directors;

• issuing of a discharge for the members of the management or supervisory bodies;

– amendments to the articles of association;

– measures to increase and reduce the capital;

– the dissolution of the company and its restructuring;

– the appointment of an auditor; and

– other matters where so provided by the articles of association in accordance with the law or other matters determined by law.

(2) The general meeting shall only have the power to adopt the annual report if the supervisory board or the board of directors has not confirmed the annual report or if the management board or the supervisory body leave the decision on the adoption of the annual report to the general meeting or if so provided by the articles of association of the company that selected one-tier management system; in this case the relevant resolutions of the management or the supervisory body must be stated in the report which the management or the supervisory body submits to the general meeting.

(3) When adopting the annual report the general meeting must take into account this Act and the accounting standards referred to in Article 53 hereof. If the general meeting amends a compiled annual report which under this Act has to be audited, the annual report must be reviewed again by an auditor in accordance with the provisions of Article 57 of this Act within two weeks of its adoption by the general meeting.

(4) The general meeting shall decide on the use of the profit for appropriation upon a proposal from the management or the supervisory body. In its decision on the use of the profit for appropriation it shall not be bound by the proposal of the management or supervisory body but shall be bound by the adopted annual report. The resolution on the use of balance sheet profit must contain data on:

1. amount of profit for appropriation

2. part of profit for appropriation to be distributed among shareholders

3. the part of the profit for appropriation to be transferred to other profit reserves

4. the part of the profit for appropriation the use of which will be decided in subsequent financial years (profit brought forward), and

5. the part of the profit for appropriation to be used for other purposes set out in the articles of association.

(5) The adopted annual report shall not be amended by the resolution on the use of the profit for appropriation.

(6) The general meeting may not decide issues concerning the business conduct except where so requested by the management.

Article 294

Discharge

(1) At the same time as deciding on the use of the profit for appropriation the general meeting shall also decide on the discharge of the management board and the supervisory board. The discharge of an individual member shall be voted on separately where so decided by the general meeting or where required by shareholders whose combined interests make up at least one-tenth of the subscribed capital.

(2) By issuing a discharge the general meeting confirms and approves the work of the management or supervisory body in the financial year. Claims based on liability for damage may also be pursued against persons who have been discharged by the general meeting.

(3) The debate on issuing a discharge shall be linked to the debate on the use of the profit for appropriation. The management must submit to the general meeting the annual report and the report of the management or supervisory body referred in Articles 282 and 285 of this Act. From the time when the general meeting is convened the reports must be accessible to shareholders at the company’s registered office. It must be stated in the convocation where the reports can be obtained. A copy of the reports must be handed over to a shareholder free of charge on request by the following working day at the latest.

The session of the general meeting at which the general meeting decides on the use of the profit for appropriation and on the discharge must be held within eight months of the end of the financial year.

(4) If the general meeting does not discharge the management board or an individual member of the management board this shall not mean that it has passed a vote of no confidence.

Division 2

Convening a general meeting

Article 295

General

**(1) **A general meeting shall be convened in cases determined by law or by the articles of association, and whenever it is in the interest of the company.

(2) The management shall decide by a simple majority on whether to convene the general meeting. The convening of the general meeting shall be announced together with the registered name and registered office of the company, the time and place of the general meeting and the conditions applying to participation at the general meeting and the exercise of voting rights.

(3) Unless otherwise provided by the articles of association, the general meeting shall be held at the registered office of the company. If the company’s shares are traded on the mstock exchange, the general meeting may also be held at the headquarters of the stock exchange.

Article 296

Convening the general meeting at the request of a minority

(1) The general meeting must be convened if shareholders whose total interest accounts for at least one-twentieth of the subscribed capital make a written request for the convening of the general meeting, stating the purpose and reasons for it. The request shall be sent to the management of the company. The articles of association can also regulate the right to convene the general meeting in another manner, in which case the total share of the shareholders requesting the general meeting be convened may not be set at more than one tenth of the subscribed capital.

(2) In the manner set out in the preceding paragraph, shareholders whose total interest accounts for at least one-twentieth of the subscribed capital may require that the subject about which resolutions are to be adopted upon their proposal at the general meeting be published.

(3) Upon the request under the first paragraph hereunder the general meeting must meet as soon as possible but no later than within two months, or the court may authorise the shareholders who requested the convocation, or their authorised persons, to convene the general meeting or to publish the subject which the general meeting should decide. The court shall issue the decision without obtaining the consent of the other parties.

Article 297

Period of notice to convene a general meeting

**(1) **The general meeting shall be convened at least one month before the session of the general meeting.

(2) The articles of association may stipulate as a condition for participating at the general meeting or exercising a voting right that the shares be stored up to a certain time prior to the general meeting or that the shareholders notify their participation prior to the general meeting.

(3) If participating at the general meeting or exercising a voting right is conditional, in accordance with the articles of association, on the shares being stored up to a certain time prior to the general meeting it shall be sufficient for them to be stored no later than ten days prior to the general meeting. Shares shall be stored with a notary or in some other manner set out in the articles of association.

(4) If participating at the general meeting or exercising a voting right is conditional on the shareholders notification prior to the general meeting it shall be sufficient for them to notify no later than three days prior to the general meeting.

Article 298

Publication of the agenda

(1) The agenda for a session of the general meeting shall be published at the same time as the notice to convene the general meeting. If after the general meeting has been convened the shareholders holding at least one twentieth of the subscribed capital request the publication of a subject which the general meeting is to decide, it shall be sufficient that the subject be published within ten days of the notice to convene the general meeting.

(2) If the general meeting is to decide on an amendment to the articles of association, the place where the text of the proposed amendment with justification is available for inspection shall also be announced. Such text with justification shall be published in the company’s newsletter or its electronic medium.

(3) For each item on the agenda on which the general meeting is to decide, the management or supervisory body must include proposed resolutions for adoption in the publication of the agenda, and only the board of directors or supervisory body in the case of the election of members of the supervisory board, the board of directors and the auditors, with the exception of the items on the agenda proposed by the shareholders on the basis of the second paragraph of Article 296 hereof. The grounded proposals for the adoption of the resolutions must be available as stated in the previous paragraph. The grounding of the proposal for the election of members of the management or supervisory body must contain at least the name and surname, education, appropriate experience and current employment of the proposed member, and for the election of the auditor at least the registered name, registered office and key recommendations.

Article 299

Notifying shareholders and members of the supervisory board

**(1) **The management must, within twelve days of the publication of a notice to convene the general meeting, notify financial organisations and associations of shareholders who at the last general meeting exercised a voting right on behalf of shareholders or who requested a report that a general meeting has been convened and inform them of the publication of the agenda and the proposals of shareholders including the shareholders’ names, surnames or registered names and the arguments and position of the management.

(2) The management must send the notification under the preceding paragraph to shareholders:

– who stored their shares with the company;

– who so request after the publication of the notice to convene the general meeting, or

– who are entered as shareholders in the company’s share register and whose voting rights were not exercised at the last general meeting by any financial organisation even if so authorised in accordance with the provisions of Article 309 of this Act.

(3) Any member of the supervisory board may require the management to send him the notification under the first paragraph of this article.

(4) Any shareholder who stores shares with the company or who is entered as a shareholder in the share register and any member of the supervisory board may require the management notify him in writing of resolutions adopted at a general meeting.

Article 300

Shareholders’ proposals

**(1) **Proposals from shareholders shall be published and notified in accordance with the preceding article only if within one week of the publication of the notice to convene the general meeting the shareholder sends the company a reasonably argued counter proposal, giving notification that he will oppose the proposal by the management or supervisory body at the general meeting and that he will prevail upon other shareholders to vote for his counter proposal.

(2) The management shall not have to send a counter proposal and the justification of it to the shareholders:

– if the publication of the counter proposal would constitute a criminal offence or an economic infringement;

– if the counter proposal would lead to a resolution by the general meeting that would be in violation of the law or the articles of association;

– if the justification of the counter proposal in points of substance contains clearly incorrect or misleading information or insults;

– if a shareholder’s counter proposal containing the same content has already been reported to the general meeting of the company;

– if during the last five years the same shareholder’s counter proposal containing essentially the same justification has already been reported to at least two general meetings of the company and less than one-twentieth of the subscribed capital represented at the general meeting voted in favour of it;

– if the shareholder makes it known that he will not attend the general meeting and has not made arrangements to be represented, or

– if during the last two years the shareholder has not presented a counter proposal to the general meeting which he has reported or has not had it presented.

(3) The justification for a counter proposal need not be reported if it contains more than one 3000 characters.

(4) The management may report in summary the counter proposals and their justification of several shareholders on the same subject.

(5) The proposals of the shareholders that have not been sent to the company within the deadline set in the first paragraph hereunder and have been submitted no later than at the general meeting itself, shall be discussed at the general meeting.

Article 301

Electoral proposals by shareholders

The provisions laid down in the preceding article shall apply mutatis mutandis to a shareholder’s proposal for the election of members of the supervisory board, board of directors or the auditors. An electoral proposal shall not require justification.

Article 302

Notification via financial and other organisations

(1) A financial organisation which stores shares in a company for shareholders must immediately send the notification under the first paragraph of Article 299 of this Act to the shareholders.

(2) If a financial organisation intends to exercise a voting right at the general meeting on behalf of a shareholder it must notify the shareholder of its own proposals for exercising the voting right in respect of particular items on the agenda. It shall call upon the shareholder to give it instructions as to how to exercise the voting right and indicate to the shareholder that if the shareholder does not provide different instructions in time it will exercise the voting right in accordance with its own proposals.

(3) The provisions laid down in the preceding paragraphs shall also apply in respect of the obligations of an association of shareholders.

3. Division 3

Minutes and the right to be informed

Article 303

List of participants

**(1) **At the general meeting a list shall be compiled of the shareholders present or represented and of the representatives, which shall contain the name, surname and address and for each shareholder the number and class of shares and, in the case of shares with nominal value, also their nominal value.

(2) The list shall be drawn up on the basis of submitted shares or share confirmations or authorisations.

(3) If a financial organisation or an association of shareholders has been authorised to exercise a voting right and the organisation or association exercises it on behalf of the person who holds that right, the amount and the class of the shares and, in the case of shares with nominal value, also their nominal value for which authorisation was obtained shall be entered in the list.

(4) The amount and class of shares and, in the case of shares with nominal value, also their nominal value shall also be entered in the list for the person authorised by the shareholder to exercise the voting right in his own name on behalf of the shareholder.

(5) The list shall be signed by the chairman and made available for examination by the participants before voting or they shall be allowed to inspect the list available through electronic media.

Article 304

(Minutes)

(1) Each resolution passed by the general meeting shall be confirmed by a notary in a notarial record.

(2) The record shall state the place and date of the session, the name and surname of the Notary Public, the result of the voting and the chairman’s summary of the adoption of resolutions.

(3) A list of the participants at the general meeting and evidence of the notice to convene the general meeting shall be attached to the record. It shall not be necessary to attach evidence of the notice to convene the general meeting if the content of such evidence is stated in the record.

(4) Within 24 hours of the conclusion of the general meeting the management must send a copy of the record and the supplements, verified by a notary, to the register.

**Article 305 **

Shareholder’s right to be informed

(1) At the general meeting the management must give the shareholders reliable information on matters concerning the company where it is important for an assessment of the agenda. The right to be informed shall also apply in respect of the company’s legal and business relations with affiliated companies.

(2) The management shall not be obliged to provide data:

– if reasonable business judgement suggests that the provision of information could cause damage to the company or an affiliated company;

– on the method of compiling the balance sheet and of making estimates, if stating these methods in a supplement is sufficient for an assessment of the property and the financial and profit position of the company which conforms with the actual circumstances; or

– if disclosure of the information would constitute a criminal offence or an economic infringement or would be in breach of good business practices.

(3) If a shareholder is given information outside a session of the general meeting, that information must be passed on to every other shareholder upon request even if it is not necessary for an assessment of an item on the agenda.

(4) If a shareholder is not given information, he may require that his question and the reason why the information was refused be entered in the record.

Article 306

Court ruling on the right to be informed

At the proposal of a shareholder, the court shall decide whether the management must provide information.

Division 4

Voting rights

Article 307

The simple majority principle

A majority of votes cast by shareholders (simple majority) shall be required in order for the general meeting to adopt resolutions, unless the law or the articles of association stipulate a larger majority or lay down other requirements.

Article 308

Voting rights

**(1) **Shareholders shall exercise their voting right based on the proportion of the shares they hold in the subscribed capital. Each no-par value share with voting rights shall carry one vote. The articles of association may provide for restrictions on voting rights such that the number of votes which an individual has based on the number of shares may not exceed a certain number or a certain percentage. The articles of association may determine that shares belonging to another person for the account of the shareholder shall also count as the shareholder’s shares. If the shareholder is a company the articles of association may determine that shares belonging to a company dependent by it or a company controlling it or a company affiliated with it in a concern of companies or to a third person for the account of such companies shall also count as its shares. Restrictions on voting rights referred to in the third sentence of this paragraph may not be laid down for individual shareholders. Such restrictions may also not be laid down for voting rights deriving from shares traded on the regulated market.

(2) The voting right shall only be acquired once the entire contribution has been paid in.

The articles of association may determine that the voting right is acquired when the statutory or some higher minimum contribution has been paid for the shares. In this case payment of the minimum contribution shall secure one vote. Where higher contributions are paid in the voting proportions shall be commensurate with the amount of the contribution paid in.

(3) If the articles of association do not provide that the voting right shall be acquired before payment of the entire contribution and if the contribution has not yet been fully paid in for any share, the voting proportion shall be commensurate with the amount of the contributions paid in. In this case the payment of the smallest contribution shall secure one vote. In such cases portions of votes shall be taken into account only if they give full votes to shareholders with the right to vote.

(4) The articles of association may not contain provisions as laid down in the second and third paragraphs of this article for individual shareholders or individual share classes.

(5) A shareholder who has put his share in pledge shall exercise the voting right on the basis of the pledge certificate which the pledge creditor must issue at his request.

(6) Voting rights may be exercised by a proxy. Such authorisation must be given in writing. The authorisation must be submitted to the company and shall be stored by it.

(7) The method of exercising voting rights shall be regulated by the articles of association. The articles of association shall lay down that a company may or must establish a connection between the authorised person present at the general meeting and the represented shareholder through electronic or other comparable media.

Article 309

Exercising voting rights through financial and other organisations and other persons

(1) A financial organisation may only exercise or verify the exercising of a voting right for registered shares if it has written authorisation to do so.

(2) Authorisation may be given to an individual financial organisation for a maximum of 15 months and may be revoked at any time.

(3) A financial organisation may only authorise persons not in its employment to carry out the authorisation if this is explicitly permitted in the authorisation.

(4) If a financial organisation exercises a voting right in the name of a shareholder on the basis of an authorisation, the authorising certificate shall be submitted to the company and shall be stored by it.

(5) If the shareholder has not given the financial organisation instructions as to the exercise of the voting right, the financial organisation must exercise that right in accordance with its own proposals, of which it must notify the shareholder, unless it can presume that the shareholder would approve of its decision if the shareholder was aware of the actual state of affairs.

(6) If the financial organisation exercises the voting right in contradiction of the shareholder’s instructions, or in contradiction of its own proposals as reported to the shareholder in the case where the shareholder gave no instructions, the financial organisation must notify the shareholder of this and state its reasons.

(7) The provisions laid down in the preceding paragraphs shall also apply mutatis mutandis to other persons exercising the voting right in the name of the shareholder on the basis of an authorisation.

(8) The obligations of financial organisations and of other persons exercising the voting right in the name of a shareholder by authorisation may not be excluded or limited in advance.

(9) Notwithstanding the provisions laid down in the preceding paragraphs, persons related to the shareholder by blood in direct line up to three removes or the shareholder’s spouse may exercise the voting right.

Article 310

Organised collection of proxies

(1) Financial organisations, an association of shareholders and other persons planning to implement, at the general meeting, their voting right on the basis of organised collection of proxies, must have a written authorisation (authorised person).

(2) Any collection of proxies intended for more than 50 shareholders of a public limited company who hold shares carrying voting rights shall be deemed organised collection of proxies.

(3) The authorisation referred to in the first paragraph hereunder shall only apply for one general meeting. It shall contain the proposed resolutions, the proposal of an authorized person for the voting on individual proposed resolutions, a call upon the shareholder to give it instructions on how to exercise the voting right and indicate to the shareholder that if the shareholder does not provide different instructions it will exercise the voting right in accordance with its own proposals which must be explained in the proxy, and the indication that a shareholder may revoke such proxy at any time.

(4) The minister competent for economy may prescribe the sample proxy for voting on individual matters at the general meeting.

(5) Proxies not collected in accordance with the provision of the first paragraph hereunder and proxies with content that is not in accordance with the provisions of the third paragraph hereunder shall be null and void.

(6) Other method of organised collection of proxies for a specific purpose may be determined by a specific law.

Article 311

Exclusion of voting right

(1) A shareholder may not participate in a vote on whether he be exempted from certain obligations or on the pursuit of a claim by the company against him. No other person may exercise the voting right in cases in which under the previous sentence the shareholder himself may not exercise that right.

(2) A contract under which a shareholder undertakes to exercise his voting right in accordance with instructions from the company, the management or supervisory body or in accordance with instructions from a dependent company shall be null and void. A contract under which a shareholder undertakes to vote for every proposal by the management or the supervisory board shall also be null and void.

Article 312

Voting on electoral proposals by shareholders

If a shareholder has submitted a proposal for the election of members of the management or supervisory body or proposes their election at a general meeting, a decision shall be taken on his proposal before a proposal from the management or supervisory body where so required by a minority of shareholders whose total interest accounts for at least onetenth of the subscribed capital represented.

Division 5

Extraordinary resolution

**Article 313 **

Separate session and separate voting

(1) Extraordinary resolutions as prescribed in this Act or in the articles of association shall be adopted by a separate vote at either a joint or a separate session of shareholders. The provisions applying to a general meeting shall apply mutatis mutandis to the notice to convene a separate session and to participation at the session as well as the right to be informed, and the provisions of general meeting resolutions shall apply mutatis mutandis to extraordinary resolutions.

(2) If shareholders participating in the voting on an extraordinary resolution require a separate session to be convened or the subject of a separate vote to be published, it shall be sufficient that their total interests on the basis of which they are able to participate in the voting on the extraordinary resolution account for one-tenth of the interests on the basis of which the right to vote may be exercised in the vote on the extraordinary resolution.

Division 6

Non-voting shares

Article 314

Non-voting priority shares

Voting rights may be excluded from shares which grant a priority right in the distribution of the profit (non-voting priority shares).

Article 315

The rights of priority shareholders

(1) Non-voting priority shares shall carry all rights which a shareholder derives from shares except voting rights.

(2) If the preferential amount is not paid out within one year or is not paid out in full and the outstanding amount is not paid the following year, priority shareholders shall have the right to vote until the outstanding amount is paid. In this case priority shares shall be taken into account when calculating the majority of the capital required by law or the articles of association.

Article 316

Annulment or limitation of priority

(1) The consent of all the priority shareholders shall be required in order for a resolution limiting or annulling the priority to be valid.

(2) Priority shareholders must also give their consent to a resolution on the issuing of priority shares which, in the distribution of the profit or the assets of the company, have priority over non-voting priority shares or which are equated with them. Such consent shall not be necessary if the shares were issued in guaranteeing priority or, if the right to vote was subsequently excluded, in excluding a share, the issue was expressly reserved and if the registered right of priority shareholders is not excluded.

(3) The priority shareholders shall decide whether to grant consent at a separate session by means of an extraordinary resolution. A majority of at least three-quarters of all the shareholders’ votes cast shall be required in order for such resolution to be valid. The articles of association may not stipulate a different majority or lay down other requirements.

(4) If the priority is annulled the shares shall carry the right to vote.

Article 317

**Non-voting ordinary shares **

The law may determine that ordinary shares shall be issued without voting rights.

Subsection 6

Audit and pursuit of compensation claims

Division 1

Audit aimed at verifying of the foundation procedures and management of individual operations of a company

Article 318

Appointment of a special auditor

**(1) **The general meeting may appoint, with simple majority of votes, a special auditor with the aim of verifying of the foundation procedures and management of individual operations of a company, including the operations of increasing and decreasing the subscribed capital in the last five years. The person who audited the company’s annual report in the last five years cannot be appointed special auditor.

(2) If the general meeting rejects the proposal for the appointment of a special auditor, such auditor can be appointed by the court on a proposal filed by shareholders whose holdings total not less than one tenth of the subscribed capital or a nominal amount or the pertaining amount of the subscribed capital totals at least 400,000 euros, provided that there exists a reason to believe that serious fraud or violations of the articles of association or the law have occurred in the conduct of business and procedures.

**(3)**The proposers from the previous paragraph must deposit the shares with the central clearing and depository house if they have not been deposited or issued in the book-entry form and may not dispose of them until the issue of a decision on the proposal, or it shall be deemed that the proposal has been withdrawn. Moreover, they must be able to prove that they were really the holders of the shares at least three months prior to the general meeting which rejected their proposal.

(4) If the general meeting appointed a special auditor, the court shall appoint, on a proposal filed by shareholders whose holdings total not less than one tenth of the subscribed capital or a nominal amount or the pertaining amount of the subscribed capital totals at least 400,000 euros, another special auditor, provided that there exists a reasonable doubt regarding the bias of the special auditor appointed by the general meeting or other grounded reasons.

(5) The proposal referred to in the second or the fourth paragraph can be submitted to the court 15 days of the general meeting at which the proposal for the appointment of a special auditor was rejected or a special auditor was appointed against which the specific reasons for replacement are being put forth.

(6) When issuing a decision on the appointment of a special auditor, the court shall impose on the company to deposit an advance payment for the costs of such special audit. If the company fails to deposit such advance payment, the court shall collect it ex officio.

An appeal shall not suspend the execution of the decision.

Article 319

Rights of a special auditor

(1) The management shall be obliged to enable the special auditor to review the books of account and the company’s documents as well as its property items and especially its cash register, stocks, securities, goods and other property.

(2) The special auditor may request that the members of the management or supervisory bodies provide all the necessary explanations and evidence for conducting a careful review of procedures.

(3) The special auditor shall have the rights from the first and the second paragraph hereunder also in relations with the concern of companies, the dominant company and a subsidiary.

(4) The law regulating auditing shall apply mutatis mutandis to the verification of the foundation procedures and management of individual operations of a company in respect of the auditing procedure and conditions.

Article 320

Special auditor’s report

(1) The special auditor must draw up a written report on the findings of the audit (hereinafter: special auditor’s report).

(2) Such special auditor’s report shall contain the facts the publication of which could cause serious damage to the company or an affiliate company, provided that these are important for the general meeting to appropriately evaluate the procedures and operations subject to the audit.

(3) The special auditor shall sign the special auditor’s report and immediately submit it to the management and the court.

(4) The management shall submit the special auditor’s report to the supervisory board of the company and put it on the agenda of the next general meeting.

(5) The management shall be obliged to publish the findings of the special auditor pursuant to Article 185 of this Act. All shareholders shall be given a copy of the special auditor’s report free of charge on request by the following working day at the latest.

(6) The provisions of the third paragraph of Article 57 of this Act shall apply mutatis mutandis in respect of the damage liability of the auditor.

Article 321

The auditor’s right to reimbursement of costs

(1) The special auditor shall have the right to reimbursement of costs and to payment for his work. The legal costs related to the appointment of the special auditor and the costs of the work of the special auditor shall be covered by the company.

(2) If the special auditor is appointed by the court than the court shall decide on the payment of costs and the fee for the work of such special auditor.

(3) In the case set forth in the preceding paragraph, the costs and the fee for the work of such special auditor shall be covered from the advance payment. If the advance payment is not sufficient for covering the costs and the fee for the work of such special auditor, the court shall impose the deposit of additional advance payment on the company. An appeal shall not suspend the execution of the decision.

(4) The provisions of the previous paragraphs shall not exclude the right of the company to claim compensation for costs arising from unjustified special audit, according to the general rules on damage liability.

Division 2

Extraordinary audit because of an underestimate of items in the annual report

Article 322

Reasons for extraordinary audit

(1) If there is reason to believe that:

1. individual items of financial statements that are a constituent part of the adopted annual report are considerably underestimated, or

2. the notes to financial statements which are a constituent part of the adopted annual report do not contain the prescribed notes or that they are incomplete and the management failed to provide the missing notes to the shareholders at the general meeting, although they requested such additional notes and also that their questions be recorded in the minutes, the court has appointed, on a proposal filed by shareholders whose holdings total not less than one tenth of the subscribed capital or a nominal amount or the pertaining amount of the subscribed capital totals at least 400,000 euros, an extraordinary auditor.

(2) It shall be deemed that the assets items are underestimated if they are estimated at a lower value in the financial statements and that liabilities items are underestimated if they are disclosed at a value lower than the one according to which they should be evaluated pursuant to the law, the accounting standards, the general accounting assumptions for compiling financial statements and the general principles for evaluating the items in these statements.

(3) The shareholders from the first paragraph hereunder must deposit the shares with the central clearing and depository house if they have not been deposited or issued in the book-entry form and may not dispose of them until the issue of a decision on the proposal, or it shall be deemed that the proposal has been withdrawn. Moreover, they must be able to prove that they were really the holders of the shares at least three months prior to the general meeting of the public limited company at which the annual report has been contested.

(4) The proposal from the first paragraph hereunder can be submitted by the shareholders to the court within 30 days of the general meeting at which the annual report has been contested or at which the general meeting acknowledged the annual report and the report of the supervisory board which approved the annual report.

(5) The law regulating auditing shall apply mutatis mutandis to the extraordinary audit in respect of the auditing procedure and conditions.

Article 323

Appointment and reimbursement of the costs of the extraordinary auditor

(1) The provisions laid down in the sixth paragraph of Article 318 and Article 321 of this Act shall apply mutatis mutandis to the appointment of extraordinary auditor and the legal costs. The person who audited the company’s annual report in the last three years cannot be appointed extraordinary auditor.

(2) In respect to the obligations of the management or supervisory body and companies in a concern towards the extraordinary auditor, the provisions of Article 319 hereof shall apply mutatis mutandis. The auditor who audited the company’s annual report has the same obligation towards the external auditor.

Article 324

Extraordinary auditor’s report

(1) The extraordinary auditor must draw up a written report on the findings of the extraordinary audit (hereinafter: extraordinary auditor’s report).

(2) If the extraordinary auditor finds out, during the auditing, that individual items in the accounting statements have been considerably overestimated or that the provisions on the contents of the annual report have been violated, such extraordinary auditor’s report must contain these findings.

(3) If the extraordinary auditor finds out, during the auditing, that the contested items are considerably underestimated, the following must be explained in the extraordinary auditor’s report:

1. the minimum amount at which individual asset items should be evaluated or the maximum amount at which individual liabilities items should be evaluated;

2. the amount for which the annual profit would be higher or the annual loss lower, considering the findings from the previous item.

(4) If the extraordinary auditor finds out, during the auditing, that the contested items are not, or at least not considerably, underestimated, a statement must be included in the extraordinary auditor’s report that the contested items are not considerably underestimated.

(5) If the extraordinary auditor finds out that the notes to financial statements which are a constituent part of the contested annual report do not contain the prescribed notes or that they are incomplete and the management failed to provide the missing notes to the shareholders at the general meeting, although they requested such additional notes and also that their questions be recorded in the minutes, the extraordinary auditor’s report must contain the missing data. If the notes to the financial statements which are a constituent part of the contested annual report did not contain the data on the methods of evaluation and formation of value adjustments that the company should use in accordance with the law, the accounting standards and its internal accounting guidelines, the auditor must state in the explanatory paragraph of the auditor’s report the identifiable amount by which the annual profit or loss would have been higher or lower if the appropriate methods had been applied.

(6) If the extraordinary auditor finds out that the notes to financial statements which are a constituent part of the contested annual report contain all the prescribed notes and are not incomplete, the extraordinary auditor’s report must contain a statement that the contested annual report contains all the prescribed data.

(7) The extraordinary auditor shall sign the extraordinary auditor’s report and immediately submit it to the management and the court.

(8) The management shall submit the extraordinary auditor’s report to the supervisory board of the company and put it on the agenda of the next general meeting.

(9) The management shall be obliged to publish the findings of the extraordinary auditor pursuant to Article 185 of this Act. All shareholders shall be given a copy of the extraordinary auditor’s report free of charge on request by the following working day at the latest.

(10) The provisions of the third paragraph of Article 57 of this Act shall apply mutatis mutandis in respect of the damage liability of extraordinary auditor.

Article 325

Contesting the findings of the extraordinary audit report

**(1) **In the cases referred to in the third or the fourth paragraph of the previous article, the company or shareholders whose holdings total not less than one tenth of the subscribed capital or a nominal amount or the pertaining amount of the subscribed capital totals at least 400,000 euros may contest the findings of the extraordinary auditor regarding the amount of the evaluated contested items at the competent court which appointed the extraordinary auditor.

(2) The shareholders from the previous paragraph must deposit the shares with the central clearing and depository house if they have not been deposited or issued in the book-entry form and may not dispose of them until the issue of a decision on the objection, or it shall be deemed that the objection has been withdrawn.

(3) The objection must state the amount at which the items were supposed to be evaluated in the extraordinary auditor’s report to which it applies.

(4) The company may also request in the objection that the court establish that the financial statements which are a constituent part of the contested annual report do not contain considerably underestimated items.

Article 326

Considering the findings of the extraordinary auditor’s report

If no objection has been filed in accordance with the provisions of the ninth paragraph of Article 324 hereof against the findings of the extraordinary auditor’s report within 30 days of publication or if such objection has been finally rejected, the management must, in the first annual report after the compilation of such extraordinary report or the final decision through which the objection has been rejected, take into consideration the findings of the extraordinary auditor’s report and evaluate the items with adequate values or amounts established in the extraordinary auditor’s report.

Division 3

Lawsuit for damage compensation

Article 327

Filing a lawsuit for damage compensation

(1) Within six months of the general meeting, the management of the company must file a lawsuit for the compensation of damage caused by the founders in relation to the foundation or the compensation of damage incurred by the company’s individual operations as a result of the management and supervisory board members violating their obligations if so decided by the general meeting by simple majority.

(2) If the lawsuit referred to in the previous paragraph must be filed against a person who still performs the duties of a member of the management or supervisory body during the adoption of such decision by the general meeting, the general meeting must appoint a special representative.

(3) Such special representative shall represent the company in the proceedings before the court which shall decide on the justification of the compensation claim and the proceedings concerning the execution of a court ruling by which the justification of such compensation claim was decided.

Article 328

Filing a lawsuit in the name of the company upon the request of the minority

(1) If the proposal for filing a lawsuit referred to in the first paragraph of the previous article has not been adopted by the general meeting or if the general meeting failed to appoint a special representative or if the management or the special representative do not act in accordance with the resolution adopted by the general meeting referred to in the first paragraph of the previous article, such lawsuit can be filed, in their own name and for the account of the company, by shareholders whose holdings total not less than one tenth of the subscribed capital or a nominal amount or the pertaining amount of the subscribed capital totals at least 400,000 euros

(2) The shareholders filing the lawsuit in accordance with the previous paragraph hereunder must deposit the shares with the central clearing and depository house if they have not been deposited or issued in the book-entry form and may not dispose of them until the issue of a final decision on the claim, or it shall be deemed that the lawsuit has been withdrawn. Moreover, they must be able to prove that they were really the holders of the shares at least three months prior to the general meeting which rejected their proposal.

(3) The provisions laid down in the sixth paragraph of Article 318 and Article 321 of this Act shall apply mutatis mutandis to the costs of the special representative and the legal costs.

Section 6

AMENDING THE ARTICLES OF ASSOCIATION AND INCREASING OR

REDUCING THE SUBSCRIBED CAPITAL

Subsection 1

Amending the articles of association

Article 329

General meeting resolution

**(1) **A resolution passed by the general meeting shall be required for any amendment to the articles of association. The general meeting may transfer authority for an amendment to the articles of association to the supervisory board or the board of directors in matters merely concerning bringing the wording of the articles of association into line with properly adopted decisions.

(2) In order for the general meeting to pass a resolution a majority of at least threequarters of the subscribed capital represented in the voting shall be required. The articles of association may stipulate a different majority of the capital but not less than a majority of the subscribed capital represented in the voting if at least one half of the subscribed capital is represented in the voting. This shall not apply to an amendment of the company’s activity and the cases for which the law stipulates a higher majority of the represented capital. The articles of association may also lay down other requirements.

(3) In order for a general meeting resolution under the preceding paragraph with which the previous ratios between several classes of shares are changed to the detriment of one class of shares to be valid, the consent of the shareholders of that particular class shall be required. The shareholders affected must adopt an extraordinary resolution giving their consent. The provisions laid down in the preceding paragraph shall apply to the adoption of this resolution.

Article 330

Transfer of at least 25% of the company’s assets

**(1) **For the validity of a contract by means of which a limited liability company undertakes to transfer at least 25% of the company’s assets, provided that no other provisions of this act concerning status changes apply, a resolution must be passed by the general meeting with a majority determined in the second paragraph of Article 329 hereof. The resolution may not contain a change of the company’s activities.

(2) The contract by means of which the company undertakes to transfer at least 25% of the company’s assets must be concluded in the form of a notarial record. At least one month prior to a session of the general meeting that is to decide on consent to the transfer of the company’s assets the contract shall be made available for inspection by the shareholders at the registered office of the company. All shareholders shall be given a copy of the contract free of charge on request by the following working day at the latest.

(3) The contract by means of which the company undertakes to transfer at least 25% of its assets must be submitted at the general meeting. At the start of the debate in the general meeting the management must give an oral explanation of the contents of the contract. The contract shall be attached to the minutes as a supplement.

(4) If, due to the transfer of at least 25% of the company’s assets such company is dissolved, the original contract or a notarised copy must be attached to the proposal for the registration of the dissolution.

Article 331

Shareholders’ consent

(1) In order for a resolution placing additional obligations on shareholders in accordance with this Act and the articles of association to be valid, the consent of all the shareholders affected shall be required.

(2) The provision laid down in the preceding paragraph shall also apply to a resolution requiring the consent of the company for the transfer of registered shares or interim certificates.

Article 332

Registering an amendment to the articles of association

(1) The management must notify an amendment to the articles of association for entry in the register. This notification must be accompanied by a fair copy of the articles of association, to which must be attached a verification from a notary that the amended provisions in the articles of association conform with the resolution on the amendment to the articles of association. If the permission of a state body is required for an amendment to the articles of association, the relevant document from that body shall also accompany the notification.

(2) Where an amendment does not concern the details under Article 201 of this Act, in the entry it shall be sufficient to make reference to documents lodged with the registration body. If an amendment concerns provisions whose content must be published, the content of the amendment shall also be published.

(3) An amendment to the articles of association shall come into force upon its entry in the register.

2. Subsection 3

Measures to increase the subscribed capital

Division 1

Increasing the subscribed capital through contributions

Article 333

(Terms and conditions)

(1) A decision to increase the subscribed capital through contributions shall be taken by a majority of at least three-quarters of the subscribed capital represented in the voting, unless the articles of association stipulate a different majority of the capital but not less than a majority of the subscribed capital represented in the voting. For an issue of nonvoting priority shares the articles of association may only stipulate a larger majority of the capital and lay down additional requirements.

(2) The subscribed capital may only be increased by means of an issue of new shares. In companies with no-par value shares, the total number of shares must be increased in the same proportion as the subscribed capital.

(3) Where there is more than one share class the approval of each share class shall be required in order for a general meeting resolution to be valid. The shareholders in each share class must adopt an extraordinary resolution to give their approval in accordance with the provisions of the first paragraph of this article.

(4) If the issue value of the shares is higher than the lowest issue value, the resolution on the increase in the subscribed capital shall determine the minimum amount which must be paid when the shares are bought.

(5) The subscribed capital cannot be increased until existing contributions are fully paid up, unless only an insignificant sum remains unpaid.

Article 334

Increasing the subscribed capital through non-cash contributions

(1) If non-cash contributions are being invested, the resolution on the increase in the subscribed capital shall determine the object of the contribution, the person from whom the company acquires that object, and the number of shares and, in the case of shares with nominal value also the nominal value, which must be provided in exchange for the noncash contribution. A resolution to this effect may only be adopted if the acceptance of the non-cash contribution and the details referred to in the first sentence of this article were published in accordance with the first paragraph of Article 298 of this Act.

(2) An increase in the subscribed capital through non-cash contributions must be examined by one or more auditors, whereby the provisions laid down in Articles 194 to 197 of this Act shall apply mutatis mutandis.

(3) The registration body may refuse to enter in a register an increase in the subscribed capital if the value of the non-cash contribution is significantly lower than the lowest issue value of shares which have to be provided in exchange for it.

Article 335

Notifying a resolution for entry in the register

**(1) **The management and the chairman of the supervisory board must notify a resolution on an increase in the subscribed capital for entry in the register. This notification shall be accompanied by a report on the audit of non-cash contributions.

(2) The notification shall state which contributions to the existing subscribed capital have not yet been paid up and why payment cannot be obtained.

Article 336

Subscription to new shares

**(1) **New shares shall be subscribed to by means of a written declaration (hereinafter: a subscription confirmation) from which the interest can be clearly identified by the number and, in the case of shares with nominal value also the nominal value, and where several classes are issued, the class of the shares. The subscription confirmation shall be issued in duplicate. It must state:

– the date on which the resolution on the increase in the subscribed capital was passed;

– the issue value of the shares, the amount of payments and any additional obligations;

– the details referred to in the first paragraph of Article 334 of this Act and, where more than one share class is issued, the pertaining amount of subscribed capital; and

– the time when the subscription becomes non-binding if by then the execution of the increase in the subscribed capital has not been registered.

(2) Subscription confirmations not stating the full details under the preceding paragraph shall be null and void.

(3) A restriction not stated on the subscription confirmation shall be invalid against the company.

Article 337

Priority right to new shares

**(1) **Existing shareholders shall have a priority right to subscribe to new shares in proportion to their contribution to the subscribed capital. The time limit for the exercise of this right shall be at least 14 days.

(2) The management must publish the issue value of the new shares and the time limit referred to in the preceding paragraph.

(3) Only the resolution on the increase in the subscribed capital may partly or wholly exclude a priority right. In this case in addition to the statutory requirements and the requirements laid down in the articles of association for an increase in the capital, the resolution shall require a majority of at least three-quarters of the subscribed capital represented in the voting. The articles of association may stipulate a larger majority of the capital and lay down other requirements.

(4) A resolution fully or partially excluding the priority right may only be adopted if the exclusion was published in accordance with the first paragraph of Article 298 of this Act.

The management must submit a written report to the general meeting on the grounded reasons for the full or partial exclusion of the priority right; the proposed issue value shall be justified in the report.

(5) It shall not be counted as an exclusion of the priority right if in accordance with the resolution the new shares are acquired by a financial organisation with the obligation to offer them to shareholders. The management must publish the share offer by the financial organisation in the company’s newsletter or electronic media together with a statement on payment for the shares and the time limit fixed for the acceptance of a bid; the same shall apply if the shares are acquired by some other person with the obligation to offer them to shareholders.

Article 338

Provision of options and other entitlements to subscribe to new shares

(1) The provision of options and other entitlements to subscribe to new shares must take account of the provisions of this Act concerning the priority right of shareholders to new shares.

(2) If options or other entitlements to subscribe to new shares are provided before the adoption of an appropriate resolution on an increase in the subscribed capital the provision of such entitlements shall have no legal effect against the company.

Article 339

Notification and registration of an increase in the subscribed capital

(1) The management and the chairman of the supervisory board must notify a resolution on an increase in the subscribed capital for entry in the register.

(2) The provisions laid down in the first paragraph of Article 199 of this Act shall apply mutatis mutandis to the notification for entry in the register.

(3) The notification shall be accompanied by:

– duplicates of the subscription confirmations and a list of subscribers, signed by the management, in which the shares of each subscriber and his payment are stated;

– in the case of an increase in the capital through non-cash contributions, the contracts on which the details referred to in Article 334 of this Act are based or which were concluded for their execution;

– a statement of account of the costs which the company will incur with the issue of new shares;

– the approval of the state body where this is necessary for an increase in the subscribed capital.

(4) The originals or certified copies of the submitted documents shall be kept at the registration body.

Article 340

Commencement of validity of an increase in the subscribed capital

The increase in the subscribed capital shall take effect on the day it is entered in the register.

Article 341

(Announcement)

The notification of the entry of an increase in the subscribed capital shall state, in addition to the content of the increase, also the issue value of the shares, the details envisaged for an increase in the subscribed capital by means of non-cash contributions and a report on the audit of the non-cash contributions. For the notification of these details it shall be sufficient to make reference to documents submitted to the registration body.

Article 342

Ban on the issue of shares and interim certificates

Rights to the new interests may not be transferred and new shares or interim certificates may not be issued before the increase in the subscribed capital is entered in the register. Any shares or interim certificates issued before this shall be null and void. The issuers shall be jointly and severally liable to the holders for any damage arising from such issue.

Division 2

Conditional increase in the subscribed capital

Article 343

(Terms and conditions)

(1) The general meeting may only decide to conditionally increase the subscribed capital for the following reasons:

– in order for the holders of convertible bonds to exercise their right to exchange them for shares, or for the exercise right of pre-emption of new shares;

– in order to prepare for the merger of several companies or in order to provide compensation to shareholders in connection with restructuring of companies when in accordance with this Act compensation may be provided in shares;

– in order for the company’s employees to exercise their right to receive new shares in exchange for the investment of monetary claims accruing to the employees on the basis of a share in the profit as guaranteed to them by the company and to ensure option entitlements to purchase shares which the company has provided to members of the management or supervisory body and employees of the company or an affiliated company.

(2) The lowest issue value of the shares issued in the procedure of conditionally increased subscribed capital may not exceed half the subscribed capital existing at the time the decision to conditionally increase the subscribed capital was taken.

(3) A resolution passed by the general meeting in contravention of the preceding paragraphs of this article shall be null and void.

(4) The provisions laid down in this Act on the right of pre-emption of new shares shall apply mutatis mutandis to convertible bonds.

Article 344

Validity of a resolution

(1) In order for a resolution on a conditional increase in the subscribed capital to be valid it shall require a majority of at least three-quarters of the subscribed capital represented in the voting. The articles of association may also stipulate a larger majority of the capital and lay down other requirements, including approval in accordance with the third paragraph of Article 333 of this Act.

(2) The resolution shall also determine:

– the purpose of the conditional increase in the subscribed capital;

– the persons entitled to participate; and

– the issue value or the criteria by which this amount is calculated.

Article 345

Conditional increase in the subscribed capital through non-cash contributions

**(1) **For non-cash contributions the resolution on the conditional increase in the subscribed capital shall determine the object constituting the non-cash contribution, the person from whom the company receives that object, the number of shares and in the case of shares with nominal value also the nominal value of the shares provided in exchange for the non-cash contribution. A resolution to this effect may only be passed if the acquisition of the non-cash contribution was published in accordance with the provision of the first paragraph of Article 298 of this Act.

(2) Monetary claims accruing to the employees of the company on the basis of a share in the profit as guaranteed to them by the company and the delivery of convertible bonds in exchange for shares shall not be counted as non-cash contributions.

(3) Any increase in the subscribed capital by means of non-cash contributions must be examined by one or more auditors. In this case, provisions of Articles 194 to 197 shall apply mutatis mutandis.

(4) The registration body may refuse to register an increase in the subscribed capital if the value of the non-cash contribution is significantly lower than the lowest issue value of the shares which have to be provided in exchange for it.

Article 346

Notification of the resolution

**(1) **The management and the chairman of the supervisory board must notify a resolution on a conditional increase in the subscribed capital for entry in the register.

(2) The notification shall be accompanied by:

– contracts concluded for the acquisition of non-cash contributions and the report on the auditing of the non-cash contributions where non-cash contributions are the object of the conditional increase in the capital stock;

– an account of the costs which the company will incur with the issue of new shares; and

– the approval of the state body where this is necessary for an increase in the subscribed capital.

(3) The originals or certified copies of the submitted documents shall be kept at the registration body.

Article 347

Notification of entry

The notification of the entry of a resolution on a conditional increase in the subscribed capital shall state, in addition to the content of the increase, also the details referred to in the second paragraph of Article 344 of this Act, the details referred to in Article 345 of this Act where non-cash contributions are acquired and confirmation that the non-cash contributions have been audited. For the details referred to in Article 345 of this Act it shall be sufficient to make reference to documents submitted to the registration body.

Article 348

Ban on the issuing of shares

Until the resolution on the conditional increase in the subscribed capital has been entered in the register, the shares may not be issued and entitled persons may not exercise their right of pre-emption of new shares. Shares issued before this shall be null and void. The issuers shall be jointly and severally liable to the holders for any damage arising from such issue.

Article 349

Declaration on the exercise of a priority right

**(1) **A priority right shall be exercised by written declaration, which shall be issued in duplicate. It shall state the number of shares and, in the case of shares with nominal value, also their nominal value, and where several classes are issued, the class of the shares, the details referred to in the second paragraph of Article 344 of this Act and the details referred to in Article 345 of this Act where non-cash contributions are acquired, as well as the date on which the resolution on the conditional increase in the subscribed capital was adopted.

(2) The declaration under the preceding paragraph shall have the same effect as a subscription declaration. Declarations whose content does not conform with the provision of the preceding paragraph or which contain restrictions on the liabilities of entitled persons shall be null and void.

(3) Any restriction which is not stated in the declaration shall be invalid against the company.

Article 350

Issuing shares

(1) The management may, taking into account the provisions of the second paragraph of Article 333 hereof, issue shares only for the purpose set out in the resolution on the conditional increase in the subscribed capital, and only after the shares have been paid for in full.

(2) The management may issue shares in exchange for convertible bonds only if the difference between the issue value of the bonds intended for conversion and the higher lowest issue value of the shares which need to be provided in exchange for them is covered from other profit reserves which may be used for this purpose or by additional payment effected by the holder of the convertible bond.

**Article 351 **

Commencement of validity of a conditional increase in the subscribed capital

The increase in the subscribed capital shall take effect with the issuing of the shares.

Article 352

Notification of a share issue

(1) Within one month of the end of the financial year the management must notify the total amount of conditionally increased capital for entry in the register.

(2) The notification shall be accompanied by duplicates of the subscription confirmations and a list of persons who exercised their priority right or the right to convert bonds. The list shall be signed by the management and it must state the shares which belong to each shareholder and the contributions paid for them.

(3) In the notification the management must declare that the shares were only issued for the purpose set out in the resolution on the conditional increase in the subscribed capital and not before the shares had been paid for in full.

(4) The originals or certified copies of the submitted documents shall be kept at the registration body.

3. Division 3

Authorised capital

Article 353

(Terms and conditions)

(1) The articles of association may authorise the management for a maximum of five years after the entry of the company in the register to increase the subscribed capital up to a certain value (authorised capital) by means of issuing new shares in exchange for contributions.

(2) Authorisation may also be given by means of an amendment to the articles of association for a maximum of five years after the entry of the amendment to the articles of association in the register. In order for the resolution to be valid it shall require a majority of at least three-quarters of the subscribed capital represented in the voting. The articles of association may stipulate a larger majority of the capital and lay down other requirements, including approval in accordance with the provision of the third paragraph of Article 333 of this Act.

(3) The amount of authorised capital may not exceed half of the subscribed capital existing at the time the authorisation was given. New shares shall only be issued with the approval of the supervisory board.

(4) The articles of association may determine that new shares be issued to the employees of the company.

Article 354

Issue of new shares

(1) Unless otherwise provided in this Act, the provisions laid down in the second paragraph of Article 333 and Articles 336 to 342 of this Act shall apply mutatis mutandis to an issue of new shares. New shares shall be issued on the basis of authorisation without an extraordinary resolution by the general meeting.

(2) The authorisation may determine that the management shall decide on the exclusion of the priority right to new shares. If the authorisation which determines this is granted by means of an amendment to the articles of association, the provisions laid down in the fourth paragraph of Article 337 of this Act shall apply mutatis mutandis.

(3) New shares shall not be issued until outstanding contributions to the existing subscribed capital have been fully paid in. The new shares may nevertheless be issued if the outstanding contributions are relatively small. The notification of the implementation of an increase in the subscribed capital shall state which contributions to the existing subscribed capital have not yet been paid in and why.

(4) The provisions laid down in the preceding paragraphs shall not apply to an issue of shares to employees of the company.

Article 355

Conditions for an issue of shares

(1) The substance of rights deriving from shares and the conditions for an issue of shares shall be decided by the management, which must obtain the approval of the supervisory board for its decision. The approval of the supervisory board shall also be required for a decision by the management under the second paragraph of Article 329 of this Act on the exclusion of a priority right to new shares.

(2) If non-voting priority shares exist, priority shares which have priority ahead of them in the distribution of the profit or assets of the company, or which are equated with them, may only be issued if so provided in the authorisation.

Article 356

Issue of shares for non-cash contributions

(1) Shares shall only be issued in exchange for non-cash contributions where this is provided for in the authorisation and if the management obtains the approval of the supervisory board.

(2) The management shall determine the object constituting the non-cash contribution, the person from whom the company acquires that object, number of shares and, in the case of shares with nominal value, also their nominal value which must be provided for the contribution if this is not already determined in the authorisation. All listed information must also be entered on the subscription confirmations.

(3) An issue of shares in exchange for non-cash contributions must be examined by one or more auditors in accordance with the provisions laid down in Articles 194 to 197 of this Act.

(4) The registration body may refuse to register an increase in the subscribed capital if the value of the non-cash contribution is significantly lower than the lowest issue value of the shares which have to be provided in exchange for it.

(5) The provisions laid down in the second and third paragraphs of this article shall not apply to the investment of monetary claims accruing to the employees of the company on the basis of a share in the profit as guaranteed to them by the company.

Article 357

Contracts on non-cash contributions prior to the registration of the company

If contracts were concluded prior to the entry in the register of the company in accordance with which a non-cash contribution must be paid for authorised capital, the articles of association must contain provisions on the acquisition of non-cash contributions. The provisions laid down in the third and fifth paragraphs of Article 187 and in Articles 193 to 197, 199 and 200 of this Act shall apply mutatis mutandis to the acquisition.

4. Division 3

Increase in the subscribed capital from the company’s assets

Article 358

(Terms and conditions)

(1) The general meeting may decide to increase the subscribed capital by converting other own capital items into subscribed capital.

(2) The first paragraph of Article 333 and the provisions of the first paragraph of Article 335 of this Act shall apply mutatis mutandis to the resolution and the notification of the resolution. The companies with no-par value shares may increase the subscribed capital also without issuing new shares in which case the resolution on the increase must state the method of increase.

(3) The general meeting may only decide to increase the subscribed capital after the adoption of the annual report for the last financial year completed prior to the decision to increase the subscribed capital.

Article 359

Reserves and profit which can be converted into subscribed capital

**(1) **The following scope of own capital items may be converted into subscribed capital:

1. capital reserves under points 4 and 5 of the first paragraph of Article 64 of this Act;

2. capital reserves under points 1 to 3 of the first paragraph of Article 64 of this Act in the amount in which these reserves, together with the statutory reserves, exceed the share of the subscribed capital under the third paragraph of Article 64 of this Act prior to its increase;

3. reserves under the articles of association where the articles of association permit them to be used for this purpose;

4. other profit reserves;

5. profit brought forward;

6. a proportionate part of the revaluation adjustment of other elements of capital under the preceding five points which is converted into subscribed capital.

(2) Own capital items which are converted into subscribed capital must be shown in the last annual balance sheet or interim balance sheet. An interim balance sheet referred to in the preceding sentence must be compiled in accordance with the provisions of this Act concerning the compilation of an annual balance sheet.

(3) It shall not be permitted to convert other items of capital into subscribed capital if a loss brought forward or a net loss for the financial year is disclosed in the balance sheet which is the basis for the conversion.

Article 360

Balance sheet as a basis

(1) The resolution on an increase in the subscribed capital must be based on the balance sheet under the second paragraph of Article 334 of this Act for which the balance sheet date is no more than eight months prior to the lodging of the proposal for the entry of the increase in the subscribed capital in the register and once it has been reviewed and given an opinion without reservation by an auditor.

(2) If the general meeting does not appoint another auditor, the audit shall be carried out by the person selected by the general meeting or appointed by the court as the auditor of the last annual financial statements.

Article 361

Notification and entry of the resolution

(1) The notification of the resolution for entry in the register shall be accompanied by the balance sheet on the basis of which the subscribed capital was increased, together with the auditor’s opinion without reservation, and the last annual report if it has not yet been submitted. The persons submitting the notification must make a declaration to the registration body to the effect that to their knowledge from the day of the balance sheet taken as the basis until the day of the notification no reduction in the assets has taken place which would conflict with the increase in the subscribed capital if a decision were to be taken on the day of the notification.

(2) The registration body shall enter the resolution on an increase in the subscribed capital in the register provided the conditions under the first paragraph of Article 335 of this Act have been fulfilled.

(3) When the resolution is entered in the register it shall be stated that the increase in the subscribed capital is from the company’s assets.

Article 362

Commencement of validity of an increase in the subscribed capital

(1) The increase in the subscribed capital shall take effect when the resolution on the increase in the subscribed capital is registered.

(2) Once the resolution referred to in the preceding paragraph has been entered in the register it shall be deemed that the new shares have been fully paid up.

Article 363

Persons entitled to participate in an increase in the subscribed capital

Shareholders shall receive new shares in proportion to their contributions to the existing subscribed capital of the company. Any resolution by the general meeting providing otherwise shall be null and void.

Article 364

Partial rights

(1) If in an increase in the subscribed capital only part of a new share relates to an interest in the existing subscribed capital, that partial right may be separately transferred and inherited.

(2) Rights deriving from a new share, including the requirement for a share confirmation to be issued, shall only be exercised if the partial rights which together form a full right are held by one shareholder or if several entitled persons whose partial rights together form a whole share combine.

Article 365

Invitation to shareholders

(1) After the entry of a resolution on an increase in the subscribed capital by issuing new shares in the register, the management must immediately publish an invitation to the shareholders to take their new shares. The invitation shall state:

– the amount of the increase in the subscribed capital; and

– the ratio between new shares and old shares. The invitation must also contain a notification that the company shall have the right to sell shares, for the account of the shareholders, which the shareholders have not taken possession of one year after the publication of the invitation after three warnings have been given.

(2) After one year has passed since the publication of the invitation, the company must publicly announce the sale of shares of which possession has not been taken. The announcement shall be published three times with intervals of at least one month. The final announcement must be made within 18 months of the publication of the invitation.

(3) After one year has passed since the publication of the final announcement the company must sell the shares which have not been taken possession of for the account of the shareholders at the official market price with the aid of a broker, or at a public auction if there is not a market price. In this regard the provisions laid down in the fourth paragraph of Article 376 of this Act shall apply mutatis mutandis.

(4) The provisions laid down in the preceding paragraphs shall apply mutatis mutandis to companies which have not issued share documents. The companies must invite the shareholders to take possession of the new shares.

Article 366

Own shares and partly-paid shares

**(1) **A company’s own shares shall be included in an increase in the subscribed capital.

(2) Partly-paid shares participate in the increase of subscribed capital in proportion to their interest in the subscribed capital; however, the increase may not be made by means of issuing new shares.

(3) For partly-paid shares with nominal value an increase in the subscribed capital shall be carried out by means of an increase in the nominal value of the shares. Where fully paid shares exist in addition to partly-paid shares, for the fully paid shares with nominal amount the increase in the capital may be carried out by means of an increase in the nominal value of the shares or an issue of new shares; the resolution on the increase in the subscribed capital must determine the method of increase. If the subscribed capital is increased by means of an increase in the nominal value of the shares, the increase shall be carried out such that amounts which cannot be covered by such increase shall not accrue to any shares with nominal amount.

Article 367

Protection of the rights of shareholders and third persons

**(1) **The ratio of rights deriving from shares shall not change with an increase in the subscribed capital.

(2) If individual rights from partly-paid shares are determined in accordance with the contribution paid for a share, until the payment of the outstanding contributions these rights shall accrue to the shareholders based on the amount of the contribution paid, increased by the percentage increase in the subscribed capital; the rights shall increase correspondingly upon further payments.

Article 368

Commencement of participation in the profit

(1) Unless otherwise provided, new shares shall participate in the profit for the whole financial year in which the resolution on the increase in the subscribed capital was adopted.

(2) The resolution on the increase in the subscribed capital may determine that new shares participate in the profit for the last financial year which ended prior to the decision to increase the capital. In this case the resolution on the increase in the subscribed capital shall be adopted prior to the adoption of the resolution on the use of the profit for the last financial year which ended prior to the decision to increase the subscribed capital. The resolution on the use of the profit shall only take effect once the subscribed capital has been increased. The resolution on the increase in the subscribed capital and the resolution on the use of the profit shall be null and void if the resolution on the increase in the subscribed capital is not entered in the register within three months of its adoption. The three-month period shall not run while a contestation or nullity suit is in progress or until permission is issued by the state body where this is required for an increase in the subscribed capital.

Article 369

Conditional capital

Conditional capital shall be increased in the same proportion as the subscribed capital. If the resolution on the conditional capital was adopted in order to secure the rights of holders of convertible bonds, other profit reserves must be established in order to cover the difference between the total issue value of the bonds and the higher total lowest issue value of the shares which need to be provided for them, unless it is agreed that the difference will be paid by the persons entitled to participate in the conversion.

Article 370

Ban on the issue of shares and interim certificates

New shares and interim certificates may not be issued before the resolution on the increase in the subscribed capital is entered in the register.

Division 5

Convertible bonds and dividend bonds

Article 371

Bond types and bond issues

(1) Bonds granting the holder the right to convert them into shares (convertible bonds) or the right of pre-emption of shares, and bonds with which the rights of the bondholders are connected with the dividends of shareholders (dividend bonds) may only be issued on the basis of a resolution passed by the general meeting. In order for the resolution to be valid it shall require a majority of at least three-quarters of the subscribed capital represented in the voting. The articles of association may stipulate a different majority of the capital and lay down other requirements, including approval in accordance with the provision of the third paragraph of Article 333 of this Act.

(2) Authorisation may be given to the management to issue convertible bonds for a maximum of five years. The management and the chairman of the supervisory board must notify the resolution on the issue of convertible bonds and a statement on their issue for entry in the register. The notification of the resolution and the statement shall be published.

(3) The provisions of the first paragraph of this article shall apply mutatis mutandis to the provision of special rights to participation in the profit.

(4) The company’s shareholders shall have the right of pre-emption of bonds referred to in the first paragraph of this article, whereby the provisions laid down in Article 337 of this Act shall apply mutatis mutandis.

Subsection 3

Measures to reduce the subscribed capital

Division 1

Ordinary reduction in the subscribed capital

Article 372

(Terms and conditions)

(1) In order for a resolution on a reduction in the subscribed capital to be valid it shall require a majority of at least three-quarters of the subscribed capital represented in the voting. The articles of association may stipulate a larger majority of the capital and lay down other requirements.

(2) Where there is more than one share class the consent of each share class shall be required in order for a general meeting resolution to be valid. The shareholders in each share class must adopt an extraordinary resolution to give their consent in accordance with the preceding paragraph.

(3) For partly-paid shares with nominal capital a decrease in the subscribed capital shall be carried out by means of a decrease in the nominal value of the shares.

(4) If the lowest issue value of shares after the decrease of the subscribed capital would not reach the amount referred to in the second or the third paragraph of Article 172 hereof, such decrease would be carried out by means of merging shares.

(5) The resolution shall determine the reason and the method by which the subscribed capital is reduced.

Article 373

Notification of the resolution

The management and the chairman of the supervisory board must notify the resolution on the reduction in the subscribed capital for entry in the register.

Article 374

Commencement of validity of a reduction in the capital

The reduction in the subscribed capital shall take effect when the resolution on the reduction in the subscribed capital is entered in the register. The resolution shall be published.

Article 375

Protection of creditors

(1) Creditors whose claims originated prior to the announcement of the entry in the register of the resolution on the reduction in the subscribed capital shall be given insurance, to the extent that they cannot be repaid, if they register their claims within six months of the announcement. In the announcement of the entry in the register the creditors shall be informed of this right.

(2) Payments to shareholders shall be made on the basis of a reduction in the subscribed capital only after six months have passed since the announcement of the entry in the register and after creditors who register in time are guaranteed repayment or insurance.

(3) Creditors may demand insurance even if the shareholders are not paid.

(2) The call for shares to be submitted must contain a warning that shares which are not submitted to the company will be annulled. The annulment shall only be carried out if the call was published in the manner set out in the first paragraph of Article 224 of this Act concerning an extended period. The annulment shall be carried out with an announcement in the company’s newsletter or electronic media. In the announcement the annulled shares shall be identified in such a way that from the announcement it is clear that the shares are annulled.

(3) The company must sell new shares which are issued in place of annulled and not exchanged shares for the account of the shareholders at the official market price with the aid of a broker, or at a public auction if there is no market price.

(4) If it can be reasonably expected that a public auction will not be successful, the shares may be sold at an appropriate location. The time, place and subject of the auction shall be published in the usual local manner. Participants shall be specifically notified unless this is not possible. The publication and the notification must be carried out at least two weeks prior to the auction. The proceeds will be paid to the participants.

Article 377

Registration

**(1) **The management must notify a reduction in the subscribed capital for entry in the register.

(2) The notification and the entry of the reduction in the subscribed capital may be combined with notification and entry of the resolution on the reduction. If the subscribed capital is reduced by the merger of shares, the registration of decreased subscribed capital can be filed and entered in the register after the completed programme of share merger in accordance with the provision of the previous paragraph hereof.

Article 378

Reduction below the minimum nominal value

The subscribed capital may be reduced below the minimum amount referred to in Article 171 of this Act if this amount is again reached by means of an increase in the subscribed capital, on which a resolution must be adopted simultaneously with the reduction in the subscribed capital, whereby such increase shall not be possible by means of non-cash contributions.

Division 2

Simplified reduction in the subscribed capital

Article 379

Terms and conditions

(1) A reduction in the subscribed capital which is intended to cover a loss brought forward or a net loss for the financial year or for the transfer of amounts to the capital eserves may be carried out in simplified form. The resolution on the reduction in the subscribed capital must state the purpose of the reduction in the subscribed capital.

(2) Simplified reduction in the subscribed capital shall be allowed if:

• there are no profit reserves or they are released beforehand apart from statutory reserves and capital reserves under points 1 to 3 of the first paragraph of Article 64 the sum of which equals 10%, or a higher percentage of the subscribed capital determined in the articles of association after the reduction in the remaining subscribed capital, and

• net profit for the year and net profit brought forward no longer exists.

(3) The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to a reduction in the capital stock in accordance with the preceding paragraphs.

Article 380

Restrictions on the use of profit by simplified reduction in the subscribed capital

A simplified reduction in the subscribed capital may not be used to distribute the profit for appropriation to shareholders or use it for other purposes set out in the articles of association until the total amount of capital reserves under points 1 to 3 of the first paragraph of Article 64 of this Act and the statutory reserves reach the share of the subscribed capital referred to in the third paragraph of Article 64 of this Act after its reduction. Until that time the restriction on the proportion of the net profit which may be transferred annually to the statutory reserves under the fourth paragraph of Article 64 of this Act shall not apply.

Division 3

Reduction in the subscribed capital by means of a withdrawal of shares

Article 381

Terms and conditions

(1) A company may withdraw shares compulsorily or through acquisition by the company. A compulsory withdrawal shall be permitted only if it was provided for or permitted in the original articles of association or through an amendment to the articles of association before the shares were acquired or subscribed to.

(2) The provisions on an ordinary reduction in the subscribed capital shall apply to a compulsory withdrawal. The articles of association or a general meeting resolution shall determine the conditions for a compulsory withdrawal and set out the details of how it is carried out. The provisions laid down in the second paragraph of Article 375 of this Act shall apply mutatis mutandis to the payment made to shareholders in the event of a compulsory withdrawal or acquisition of shares for withdrawal.

(3) The provisions on an ordinary reduction in the subscribed capital shall not apply if shares for which the issue value has been fully paid up:

– were placed at the company’s disposal without charge, or

– were withdrawn against the value of the profit for accumulation or the reserves under the articles of association or other profit reserves if their use for such purposes is permitted.

(4) Any decision to reduce the subscribed capital by means of a withdrawal of shares in cases under the preceding paragraph shall be taken by the general meeting. In order for such resolution to be valid it shall require a simple majority of the votes. The articles of association may stipulate a larger majority and lay down other requirements. The resolution shall state the purpose of reducing the capital. The management and the chairman of the supervisory board must notify the resolution for entry in the register.

(5) In cases under the third paragraph of this article an amount shall be allocated to the capital reserves which is equal to the total lowest issue value of the withdrawn shares.

(6) A resolution by the general meeting shall not be required if a compulsory withdrawal of shares is provided for in the articles of association. In the application of the provisions on an ordinary reduction in the subscribed capital a decision by the management to withdraw shares shall be sufficient instead of a resolution by the general meeting.

**Article 382 **

Commencement of validity of a reduction in the subscribed capital

The subscribed capital shall be reduced by the full lowest issue value of the withdrawn shares as of the day the resolution is entered in the register or as of the day the shares are withdrawn. In the case of a compulsory withdrawal provided for in the articles of association, and if the decision to withdraw the shares is not taken by the general meeting, the subscribed capital shall be reduced once the compulsory withdrawal has been carried out. In order for the shares to be withdrawn the company must take action to annul the rights deriving from the shares.

Article 383

Notification of a reduction

The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to the notification of a reduction in the subscribed capital for entry in the court register.

Section 7

SPECIAL PROVISIONS ON THE TREATMENT OF MINORITY SHAREHOLDERS

Subsection 1

Exclusion of minority shareholders from the company

Article 384

Transfer of shares against payment of appropriate monetary compensation

(1) On a proposal of a shareholder whose shareholding represents at least 90% of the company’s subscribed capital (hereinafter: the principal shareholder) shall adopt a resolution on the transfer of shares of shares of the remaining shareholders (hereinafter:

minority shareholder) to the principal shareholder against payment of appropriate monetary compensation.

(2) The provisions laid down in the second to fourth paragraphs of Article 528 of this Act shall also apply mutatis mutandis to the establishment of the amount of shares belonging to the principal shareholder.

Article 385

Monetary compensation

(1) The principal shareholder shall set the amount of monetary compensation by applying mutatis mutandis the provisions of the fifth and the sixth sentence of the second paragraph of Article 556 hereof. The management must make available to the principal shareholder the necessary information and evidence.

(2) Prior to the convocation of the general meeting, the principal shareholder must submit to the management of the company a statement from the bank in which the bank confirms its joint and several liability to meet the obligations of the principal shareholder, namely, to pay monetary compensation to the minority shareholders for the acquired shares immediately after the registration of the transfer of shares in the appropriate register.

Article 386

Preparing and holding the general meeting

(1) The publication of the agenda of the general meeting to decide on the transfer of shares to the principal shareholder must contain:

• name and registered office of the company or name, surname and address of the principal shareholder; and

• the amount of monetary compensation offered by the principal shareholder.

(2) The principal shareholder shall prepare a written report for the general meeting in which it shall explain the assumptions for the transfer of shares and the appropriate amount of monetary compensation. The appropriate amount of monetary compensation offered by the principal shareholder shall be reviewed by one or more auditors appointed by the court on a proposal by the principal shareholder. The provisions of Article 583 of this Act shall apply mutatis mutandis to the review of the appropriateness of the amount of monetary compensation. In their reports, the principal shareholder and the auditors shall not be required to disclose the information referred to in the first and third indents of the second paragraph of Article 305 of this Act. An auditor’s report shall not be requiredif it is waived by all minority shareholders in the form of a statement. Such waiver statements must be given in the form of a notarial record.

(3) Every shareholder shall be given access to the following, prior to the general meeting, at the registered office of the company:

– proposal on the transfer of shares;

• annual reports for the last three financial years;

• a written statement of the principal shareholder from the second paragraph of this Article; and

• the auditor’s report from the second paragraph of this Article.

(4) All shareholders shall be given on request and free of charge a copy of the documents referred to in the first, third and fourth indent of the previous paragraph by the following working day at the latest.

(5) The documents referred to in the third paragraph of this article shall be submitted to the session of the general meeting. At the beginning of the discussion at the general meeting, the principal shareholder must orally explain the proposal of the resolution for the transfer of shares and the method of calculating the amount of monetary compensation. Before a decision is taken on consent to the transfer of shares to the principal shareholder, the principal shareholder must inform the minority shareholders of all significant changes in the assets of the company that occurred between the drawing up of the resolution on the transfer of shares and the session of the general meeting.

Significant changes shall, in particular, be those meaning that a different monetary compensation would be appropriate.

Article 387

Entry of the resolution on the transfer of shares; legal consequences

(1) The management must submit an application for the entry of the resolution on the transfer of shares in the register. A notarised copy of the minutes of the general meeting which decided on the exclusion of minority shareholders and the relevant enclosures shallbe attached to the proposal.

(2) For the proposal of the entry of the resolution on the transfer of shares to the principal shareholder, its enclosures and the process of deciding on the proposal, the provisions of Point 1 of the second paragraph and third to fifth paragraph of Article 590 hereof shall apply mutatis mutandis.

(3) With the entry of the resolution on the transfer of shares in the register, all shares held by minority shareholders shall be transferred to the principal shareholder. The shares in book-entry form shall be deposited by the clearing and depository house on a special account so that the minority shareholders shall not be able to dispose of them; if the company issued share certificates, these shall only be used as evidence for exercising the right to monetary compensation until they are delivered to the principal shareholder.

(4) A minority shareholder can keep the legal interest if they filed a lawsuit for which legal interest is requested and which stems from the holdership of the company’s shares until the date of the general meeting to decide on the transfer of shares to the principal shareholder.

Article 388

Court test of monetary compensation

**(1) **The resolution of the general meeting on the consent to the transfer of shares to the principal shareholder cannot be contested if the monetary compensation offered by the principal shareholder, referred to in Article 385 of this Act, is inappropriate or if it has not been offered or not been offered correctly.

(2) If the compensation offered is inappropriate, any minority shareholder may propose that appropriate compensation be determined by the court. The same shall apply if the principal shareholder did not offer compensation or did not offer it correctly. The provisions laid down in the second paragraph and Point 1 of the third paragraph of Article 605 and in Articles 606 to 615 of this Act shall apply mutatis mutandis to the procedure for determining appropriate monetary compensation through court.

Subsection 2

The right of minority shareholders to withdraw from the company

Article 389

Request for the purchase of all the remaining shares; appropriate monetary compensation

(1) Upon a request of one or more minority shareholders, the principal shareholder must, within a month of receiving the request, offer such individual or more shareholders appropriate monetary compensation for the purchase of all the remaining shares of each individual minority shareholder.

(2) The provisions of the first paragraph of Article 385 and the second paragraph of Article 388 of this Act shall apply mutatis mutandis to the determination of appropriate amount of monetary compensation.

Section 8

NULLITY AND CONTESTABILITY

Article 390

Reasons for nullity

In addition to the cases set out in the first and second paragraphs in connection with the third paragraph of Article 343, in Article 363 and in the second paragraph of Article 368 of this Act, a general meeting resolution shall also be null and void:

– if it was adopted at a general meeting which was not convened in accordance with the second paragraph of Article 295 of this Act, unless all the shareholders participated or were properly represented in the general meeting;

– if it has not been confirmed in accordance with the first and second paragraphs of Article 304 of this Act;

– if it is not compatible with the essence of the company or if in terms of its content it is in violation of the provisions of this Act which are used solely or predominantly to protect the creditors of a company or are otherwise in the public interest;

– if the content of the resolution is in violation of morals or public order;

– a general meeting resolution referred to in Article 378 of this Act shall be null and void if within six months of its adoption a resolution on an increase in the subscribed capital and the execution of the increase in the subscribed capital have not been entered in the register; this period shall not run while a procedure to establish nullity or contestability is in progress before the court.

Article 391

Time limits for establishing nullity

**(1) **Nullity of a resolution passed by the general meeting may no longer be established for the reason set out in the second indent of the first paragraph of Article 359 of this Act after it has been entered in the register.

(2) Nullity of a resolution passed by the general meeting may no longer be established for the reasons set out in the first, third, fourth or fifth indent of the first paragraph of Article 359 of this Act more than three years after it has been entered in the register provided no action has been lodged within this period to establish the nullity of the resolution.

Article 392

Nullity of elections

In addition to the circumstances described in Article 390 of this Act, the election of members of the supervisory board or the board of directors shall also be null and void:

– if the supervisory board or the board of directors is composed in contravention of the law or the articles of association;

– if the general meeting elects a person who was not proposed in accordance with the law or the articles of association; or – if more members are elected than provided for by law or the articles of association.

Article 393

Procedure for establishing nullity

The procedure for establishing nullity shall be rapid.

Article 394

Legal consequences of nullity

A resolution established as null and void shall have no legal consequences. Anyone who has received anything on the basis of a resolution established as null and void must repay the entire value together with costs to the company.

Article 395

Reasons for contestability; convalidation of challenged resolutions

**(1) **A general meeting resolution shall be contestable:

1. if the content of the resolution is in violation of the law or the articles of association, or

2. if provisions of the law or the articles of association were violated at the adoption of the resolution and these violations affect the validity of the resolution (for example, an insufficient majority voted in favour of adopting the resolution).

(2) Notwithstanding point two of the first paragraph of this article a general meeting resolution shall always be contestable if the shareholders’ right to be informed under Article 305 of this Act was violated in connection with the procedure to adopt the resolution.

(3) A resolution may also be contested on the basis that a shareholder in exercising his voting right attempted to secure for himself or for a third party special advantages to the detriment of the company or the other shareholders, if that purpose can be achieved on the basis of the adopted general meeting resolution. This shall not apply where appropriate compensation for such damage is provided to other shareholders pursuant to the resolution.

(4) A general meeting resolution may not be contested on the basis of a violation of the provisions of Article 302 of this Act.

(5) A contested general meeting resolution may no longer be annulled once the general meeting has confirmed the resolution in a new resolution provided no action has been lodged within the time limit for its annulment or to establish its nullity, or where such action has been withdrawn or where a claim for annulment of the new resolution or for establishing its nullity has been refused as final.

(6) Notwithstanding the fifth paragraph of this article a person referred to in the seventh paragraph of this article who demonstrates a legal interest in having the resolution annulled for the period until the adoption of a new (confirming) resolution, may ask the court to establish that the contested resolution was not valid until the adoption of the new (confirming) resolution.

(7) A general meeting resolution may be contested by:

– any shareholder under the conditions laid down in this Act;

• the management,

– any member of the management or supervisory body if by implementing the general meeting resolution the members would be committing a criminal offence or acting in contravention of the law.

Article 396

Contesting suit

**(1) **A contesting suit shall be lodged within one month. The one-month period shall begin to run:

– if the plaintiff participated in the general meeting, on the day the general meeting ended;

– if the plaintiff did not participate in the general meeting, on the day he learned of the resolution or should have learned of it.

(2) If the resolution was published, the one-month period shall begin on the day of publication.

Article 397

Notification of intention to contest

(1) A shareholder who was present at the general meeting may only contest a resolution if at the general meeting he immediately informed the general meeting for the record of his intention to lodge a contesting suit; and a shareholder who was not present may contest a resolution only in the case where he was illegally prevented from attending the general meeting or if he was not correctly invited to the general meeting or if the general meeting decided an issue which was not on the agenda.

(2) The management must publish notification that a contesting suit has been lodged in the same manner in which the contested resolution must be published.

Article 398

Effect of an annulled resolution

If the court annuls a resolution passed by the general meeting or declares it to be null, that ruling shall take effect against all shareholders and members of the management or supervisory body. In the case of a resolution which is entered in the register, the content of the court ruling shall be entered ex officio. The management must publish the content of the ruling.

Article 399

Contestability of a resolution on the use of the profit for appropriation

(1) A general meeting resolution on the use of the profit for appropriation may be contested if it is in contravention of the law or the articles of association or if the general meeting decided not to distribute profit to the shareholders amounting to at least 4 per cent of the subscribed capital where in the judgement of a good manager this was not necessary given the circumstances in which the company is operating.

(2) A contesting suit in respect of a general meeting resolution on the use of the profit for appropriation may be lodged by shareholders whose combined interest is at least onetwentieth of the subscribed capital or a lowest issue value of 400,000 euros. If the court finds that there exist circumstances which justify the division of profit for appropriation it shall amend the resolution adopted by the general meeting upon the request of the shareholders.

Article 400

Contesting a resolution on an increase in the subscribed capital

(1) A resolution on an increase in the subscribed capital by contributions may be contested in accordance with the provisions laid down in Article 395 of this Act.

(2) If a priority right of shareholders has been wholly or partly excluded a resolution may also be contested on the basis that the issue value or the minimum amount beneath which new shares may not be issued is set disproportionately low in the resolution on an increase in the subscribed capital. This shall not apply if the new shares are acquired by a third party with the obligation to offer them to shareholders.

Article 401

Nullity of the annual report and contestability of a resolution on the adoption of the annual report

(1) The annual report shall be null and void:

– if its content is in contravention of the provisions of this Act which are used exclusively or primarily to protect the creditors of the company or are otherwise in the public interest;

– if under this Act it should have been audited but an audit has not been performed or has not been performed in compliance with the method and conditions laid down in the law regulating auditing;

– if the provisions of this Act or the articles of association on the creation (increase) or use (reduction) of the capital reserves and profit reserves were violated in the procedure for the adoption of the annual report.

(2) An annual report whose adoption has been decided by the management or supervisory body shall also be null and void if in the adoption of the annual report the supervisory board did not act in accordance with the first and second paragraphs of Article 282 of this Act.

(3) When, in adopting the annual report, the general meeting has amended a compiled annual report in accordance with the second sentence of the third paragraph of Article 293 the annual report shall also be null and void if within two weeks of its adoption the amendments to the annual report have not been reviewed by an auditor or if the auditor who reviewed the amendments to the annual report has not given a positive opinion in respect of these amendments.

(4) An annual report which has been adopted by the general meeting shall also be null and void when the general meeting resolution on the adoption of the annual report is null and void for the reasons laid down in the first or second indent of Article 390 of this Act.

(5) A general meeting resolution on the adoption of the annual report may be contested in accordance with the provisions laid down in Article 395 of this Act but may not be contested on the basis that the content of the annual report is not in conformity with the law or the articles of association.

Section 9

DISSOLUTION OF A COMPANY

Subsection 1

Ordinary dissolution

Article 402

Reasons for dissolution

(1) A company shall be dissolved:

– upon the expiry of the period for which it was formed ;

– by resolution of the general meeting, which must be adopted with a majority of at least three-quarters of the subscribed capital represented; the articles of association may stipulate a larger majority and lay down other requirements;

– if the management is inactive for more than 12 months;

– if the court establishes that the corporation is null and void;

– if the company goes bankruptcy;

– on the basis of a court ruling;

– when the company is merged with another company; or

– if the company’s subscribed capital is reduced below the minimum amount stated in Article 171 of this Act, other than in the case under Article 378 of this Act.

(2) The articles of association may determine other reasons for the company to be dissolved.

(3) Shareholders whose combined interest accounts for at least one-twentieth of the subscribed capital and each member of the management or supervisory body may lodge a suit requiring the court to decide on the dissolution of the company if it believes that that the company’s goals cannot satisfactorily be achieved, or that other good reasons exist for the dissolution of the company, in particular, defects in the provisions of the articles of association concerning the amount of subscribed capital, the definition of shares or the activity of the company which are not in conformity with this Act. If the defects can be remedied the suit may only be lodged after the person entitled to lodge the suit has called on the company to remedy the defects and the company has not taken action within three months or the defects have not been remedied within one year.

Article 403

Adoption of a resolution on the dissolution of a company and the commencement of liquidation

**(1) **In the cases under the first and second indents of the first paragraph of the preceding article the resolution on the dissolution of the company and commencement of liquidation (liquidation resolution) shall be adopted by the general meeting.

(2) In the case under the first indent of the first paragraph of the preceding paragraph the general meeting must adopt a liquidation resolution within 30 days of the expiry of the period set out in the articles of association.

(3) In the cases under the third, fourth and sixth indents of the first paragraph of the preceding article the liquidation resolution shall be issued by the court.

Article 404

Commencement of the liquidation procedure

(1) The procedure for the liquidation of a company based on a liquidation resolution for the reasons stated in the first and second indents of the first paragraph of Article 402 of this Act shall be carried out by the company.

(2) In the cases under the third paragraph of the preceding article the liquidation procedure shall be carried out by the court.

(3) In the case under the third indent of the first paragraph of Article 402 of this Act a proposal for the dissolution of the company may be lodged with the court by a creditor or by shareholders accounting for at least one-tenth of the subscribed capital.

(4) In the case under the sixth indent of the first paragraph of Article 402 of this Act a creditor or any shareholder may lodge a proposal for dissolution with the court. The court shall pass a liquidation resolution if the shareholders do not provide subscribed capital in the amount of the statutory minimum within a time limit determined by the court, which may not be shorter than three months.

(5) In the case under the third and eighth indents of the first paragraph of Article 402 of this Act the liquidation procedure shall be carried out by the court ex officio. The costs of liquidation shall be covered from the assets of the company, and if the assets are not sufficient then also from the assets of the founders.

Article 405

Content of a liquidation resolution

(1) A liquidation resolution shall state the following details:

– the registered name and registered office of the company;

– the body which adopted the resolution;

– the reason for the dissolution;

– the time limit within which creditors and shareholders holding bearer shares must register their claims; the time limit may not be less than 30 days from the date of publication of the resolution; and

– the name, surname and address or the registered name and registered office of the liquidator.

(2) A liquidation resolution may also contain other details connected with the dissolution and liquidation of the company.

(3) The body which adopts the liquidation resolution shall send the resolution to the registration body in order for the commencement of liquidation to be entered in the register.

Article 406

Liquidation procedure

(1) The liquidation procedure shall be carried out after the entry of the commencement of liquidation in the register.

(2) Where there are no other specific provisions in this section, the provisions laid down in this Act applying to a company before the adoption of a liquidation resolution shall continue to apply to the company until the end of the liquidation.

Article 407

Designation in the registered name

After the entry of the commencement of liquidation in the register the company must use the addition “in liquidation” in its registered name.

Article 408

Bodies in the liquidation procedure

(1) Liquidation shall be carried out by one or more liquidators.

(2) The liquidators shall be members of the management unless otherwise provided by the articles of association, the general meeting or the liquidation resolution.

(3) At the proposal of the supervisory board, the board of directors or shareholders accounting for one-twentieth of the subscribed capital, and where good reasons exist, a liquidator shall be appointed by the court.

(4) The provisions laid down in this Act and in the articles of association on decisionmaking by the management shall apply mutatis mutandis to decision-making by the liquidators unless otherwise provided in the liquidation resolution.

Article 409

Liquidation company

The liquidator may also be a legal person (liquidation undertaking).

Article 410

Declaration by the liquidator

A liquidator must submit a written declaration to the effect that he will carry out all tasks connected with the liquidation conscientiously and fairly.

Article 411

Dismissal of a liquidator

The body which appointed the liquidator may dismiss him at any time without explanation.

Article 412

Powers of a liquidator

A liquidator shall:

– represent the company;

– compile an opening liquidation balance sheet;

– conclude unfinished business;

– pay off the claims of creditors;

– publish an invitation to creditors for them to register their claims with him within a time limit which may not be less than 30 days from the day on which the invitation was published;

– recover the claims of the company;

– realise the liquidation estate to the extent necessary in order to pay off creditors;

– prepare a proposed report on the progress of the liquidation procedure and the division of assets;

– propose the deletion of the company from the register; and

– carry out other tasks connected with the liquidation as laid down in law, the articles of association or the resolution on the liquidation of the company.

Article 413

Continuation of activity

The liquidator shall be entitled to continue the company’s activity by concluding new operations only with the approval of the body which adopted the liquidation resolution.

Article 414

Stopping the liquidation procedure and continuing with a bankruptcy procedure

If on the basis of the registered claims the liquidator establishes that the assets of the company are not sufficient to pay off all the claims of creditors in full including statutory interest, the liquidation administrator must stop the liquidation procedure without delay and submit a proposal for the commencement of a bankruptcy procedure.

Article 415

Report on the progress of the procedure and proposal for the division of assets

After the company’s debts have been paid off the liquidator shall prepare a report on the progress of the liquidation and a proposal for the division of the assets, unless otherwise provided in the liquidation resolution.

Article 416

Adoption of a report on the progress of the procedure and the division of assets

(1) The body which adopted the liquidation resolution shall vote on the proposed report on the progress of the liquidation procedure and the proposal for the division of assets, unless otherwise provided for in the resolution.

(2) If the general meeting is responsible for adopting the report and the resolution on the division of assets and yet in spite of being convened twice it has not met or did not have a quorum, it shall be deemed that the proposal drawn up by the liquidator is adopted by resolution of the general meeting.

Article 417

Period for division of assets

(1) Pursuant to a resolution on the division of assets the liquidator shall divide the assets within 30 days.

(2) If the resolution under the preceding paragraph was adopted by the court the 30-day period shall begin when the resolution becomes final .

Article 418

Division of assets

**(1) **After repayment of all the company’s liabilities the remaining assets shall be divided among the shareholders in proportion to their contributions. Contributions that have not yet been paid in must be paid in before the division in accordance with the articles of association.

(2) When the division of assets has been completed the liquidator shall deliver to the registration body the report on the progress of the liquidation procedure adopted at the general meeting and the general meeting resolution on the division of assets, shall declare that all the assets have been divided in accordance with the resolution on the division of assets and propose the deletion of the company from the register.

Article 419

(Damage liability)

(1) After the deletion of the company from the register it shall not be possible to contest the actions of the liquidator but compensation for damage may be claimed from the liquidator .

(2) The liquidator shall be liable for damage which he caused to a creditor during the liquidation procedure up to the value of five times the payment which he received for his work. If this amount is insufficient to pay for the damage caused, all the shareholders shall be jointly and severally liable up to the amount of the contributions paid out of the liquidation estate. It shall not be considered damage if a creditor did not receive payment for his claim because he did not register it in time and the liquidator was not and could not have been aware of it.

(3) The provisions laid down in the preceding paragraph shall not apply to damage caused by the liquidator to shareholders. For such damage the liquidator shall be liable in accordance with the general rules on damage liability.

(4) Compensation claim against a liquidator shall be time-barred one year from the day on which the company was deleted from the register.

(5) Where there is more than one liquidator, they shall be jointly and severally liable.

Article 420

Claims of shareholders

In the liquidation procedure the shareholders may pursue their claims arising from legal transactions with the company.

Article 421

Protection of creditors

**(1) **The assets may not be divided among the shareholders until six months have elapsed since the publication of the final announcement under Article 405 of this Act.

(2) The liquidator shall be obliged to provide appropriate insurance for the repayment of claims which have not yet matured and known claims which a creditor has not registered.

Article 422

Continuation of the company

(1) If the liquidation resolution was adopted for the reasons set out in the first or second indents of the first paragraph of Article 402 of this Act, the general meeting may decide, before the start of the division of assets among the shareholders, by a majority of at least three-quarters of the subscribed capital represented, that the company shall continue to operate.

(2) In this case the liquidator must propose the deletion from the register of the entry of the commencement of liquidation and attach the general meeting resolution to the proposal.

Article 423

Remuneration of the liquidator

**(1) **The liquidator shall have the right to reimbursement of costs and to payment for his work from the assets of the company. The amount of the payment shall be determined by the general meeting or by the court.

(2) The payment for work and reimbursement of costs shall be made to the liquidator after the payment of liabilities to creditors but before the division of the assets among the shareholders.

Article 424

Storage of books of account

(1) Books of account, accounts documents and the documentation on the liquidation procedure must be stored by one of the shareholders, appointed by the liquidator , or by an organisation determined by law.

(2) Creditors and shareholders shall have the right to examine the documents referred to in the preceding paragraph for three years after the conclusion of the liquidation procedure.

(3) An entry must be made in the register stating whom the documents referred to in the first paragraph of this article are stored with.

2. Subsection 3

Dissolution of a company by simplified procedure

Article 425

Terms and conditions

(1) A company may be dissolved by simplified procedure without going into liquidation if all the shareholders propose to the registration body the deletion of the company from the register without liquidation and attach with the proposal a resolution on the dissolution of the company by simplified procedure and a declaration by all the shareholders, verified by a notary, to the effect that all the company’s liabilities have been settled, that all relations with employees have been settled and that they are assuming the liability to pay any potential outstanding liabilities of the company.

(2) Creditors may pursue their claims on the shareholders who submitted the declaration under the preceding paragraph within one year of the announcement of the deletion of the company from the register.

(3) The shareholders shall be jointly and severally liable with all their assets for liabilities under the preceding paragraph.

(4) The registration body may require the shareholders to demonstrate the truth of their declaration under the first paragraph of this article. The registration body may also require other forms of insurance for the assumed liability to pay the debts.

Article 426

Content of a resolution on the dissolution of a company by simplified procedure

A resolution on the dissolution of a company by simplified procedure shall state the registered name and registered office, the body which adopted the resolution on the dissolution, an indication that the dissolution is being conducted by simplified procedure, the number of shareholders and their names, surnames and addresses, and a proposal for the division of assets.

Article 427

Publication of a dissolution resolution and the assumption of liabilities by the shareholders

**(1) **The registration body shall publish the dissolution resolution together with the names, surnames and addresses or registered names or registered offices of all the shareholders who have assumed the liability to pay any potential outstanding liabilities to creditors.

(2) This notification shall also state that an appeal against the dissolution resolution shall be permitted within 15 days and that otherwise the registration body will pass a resolution on the deletion of the company from the register.

Article 428

Appeal against a dissolution resolution

**(1) **Shareholders, creditors or the competent state bodies may lodge an appeal against a resolution on the dissolution of a company by simplified procedure within 15 days of the publication of the resolution.

(2) The appeal shall be decided upon by the registration body. If the registration body establishes that the appeal is justified and that creditors or shareholders would suffer damage, it shall annul the resolution on dissolution by simplified procedure and notify the bodies of the company, which shall be obliged to continue the liquidation procedure in accordance with this Act, or given the circumstances adopt a dissolution resolution itself.

(3) Upon the annulment of the resolution on dissolution by simplified procedure the declarations by the shareholders on the assumption of liability for the liabilities of the company shall lose their legal effect.

(4) The registration body shall inform the public of the annulment of the resolution on the dissolution of the company by simplified procedure in the same manner as for the dissolution resolution.

Article 429

Deletion of a company from the register

(1) If an appeal is not lodged or if an appeal is lodged but is rejected by the registration body, the registration body shall issue a resolution on the deletion of the company from the register and shall publish it. An appeal shall be permitted against this resolution within 15 days of the date of publication.

(2) The registration of the deletion of the company from the register shall also state the names, surnames and addresses or registered names and registered offices of shareholders who assumed the liability to pay any potential liabilities of the deleted company.

Chapter 5

EUROPEAN PUBLIC LIMITED COMPANY (SE)

Section 1

GENERAL PROVISIONS

Article 430

The purpose of special provisions on SE

For the purpose of implementation of Regulation 2157/2001/EC this chapter defines the method of foundation, management, transfer of registered office and dissolution of European public limited company (hereinafter: SE).

Article 431

Entry in the register

(1) SE shall be entered in the register. The provisions laid down in this Act on the entry of a public limited company in the register shall apply mutatis mutandis to the application for the entry of a public limited company in the register.

(2) The application for entry of SE in the register must be accompanied by:

• agreement on worker participation in the management of SE according to the method and under conditions stipulated by law regulating the participation of workers in the management of SE; or

• resolution on the termination of negotiations for the conclusion of the agreement referred to in the previous indent in accordance with the law regulating the participation of workers in the management of SE; or

• the statement of the members of the management that the agreement referred to in the first indent of this paragraph has not been reached within the appropriate deadline.

Article 432

**Publication of notifications by SE in the Official Journal of the European Union **

The issuer of the Official Gazette of the Republic of Slovenia must inform the body competent for the publications in the Official Journal of the European Union about the data or notifications published in the Official Journal of the European Union pursuant to Article 14 of the Regulation 2157/2001/EC within one month of the publication in the Official Gazette of the Republic of Slovenia.

Article 433

Registered office of SE

**(1) **The articles of association shall lay own the registered office of SE in accordance with Article 30 of this Act.

(2) If the management of SE with registered office in the Republic of Slovenia transfers its operations to another Member State, the registration body shall ask the company to reestablish its operations in the Republic of Slovenia or transfer its registered office in accordance with Article 8 of the Regulation 2157/2001/EC within the appropriate deadline. If the company fails to establish management in the Republic of Slovenia or transfer the registered office in accordance with Article 8 of the Regulation 2157/2001/EC within the deadline set by the court, the registration body shall issue the resolution on the dissolution of the company. An appeal may be filed against the resolution on the dissolution of the company which shall suspend the execution of the resolution.

Section 2

TRANSFER OF SE REGISTERED OFFICE

Article 434

Offer of monetary compensation in the proposal for the transfer of registered office

**(1)**The proposal for the transfer of SE to another Member State must, besides the data stated in the second paragraph of Article 8 of the Regulation 2157/2001/EC, also contain the offer for the acquisition of shares of those shareholders which objected, for the record, to the resolution on the transfer at the general meeting deciding on the transfer of the registered office, against the payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) The obligation to ensure monetary compensation can be assumed by SE or another person.

Article 435

Review of the appropriateness of the amount of monetary compensation

(1) The appropriateness of the amount of monetary compensation offered proposal on the transfer of SE registered office must be verified by an auditor.

(2) The provisions of the second, fourth, sixth, seventh and eighth paragraph of Article 583 of this Act shall apply mutatis mutandis to the review of the appropriateness of the amount of monetary compensation.

(3) The auditor’s report on the appropriateness of monetary compensation must contain an opinion on whether the offered monetary compensation is an appropriate compensation for the acquired shares. The provisions laid down in the fifth paragraph of Article 583 of this Act shall apply mutatis mutandis for the auditor’s report.

**Article 436 **

Review of the transfer of SE registered office by the supervisory board

On the basis of the management report on the transfer of SE registered office and the report on the audit of the appropriateness of monetary compensation the supervisory board must examine the intended transfer of SE registered office and draw up a written report. In the report on the review of the transfer of SE registered office the supervisory board shall not be required to disclose the information referred to in the first and third indents of the second paragraph of Article 305 of this Act.

Article 437

Notification of the proposal for the transfer of SE registered office)

(1) At least two months prior to the date of a session of the general meeting which is to decide on the transfer of SE registered office in another Member State, the management must submit to the registration body the proposal of the transfer of SE registered office which has been reviewed by the supervisory board of this company. The notification on the submission of the proposal for the transfer of SE registered office to the registration body shall be published by the company. The notification must draw the attention of shareholders to their rights under the second and third paragraphs of this article and Article 440 hereof, and the attention of creditors and to their rights under the second and third paragraphs of this article and Article 442 hereof.

(2) At least one month prior to the session of the general meeting that is to decide on the transfer of SE registered office the following documents shall be made available for inspection by the shareholders at the registered office of the company, besides the documents determined in the fourth paragraph of Article 8 of the Regulation 2157/2001/EC:

1. report on the review of the appropriateness of the amount of monetary compensation;

2. the report of the supervisory board on a review of the transfer of registered office; and

3. annual report for the last financial year;

(3) All shareholders and creditors shall be given a copy of these documents free of charge on request by the following working day at the latest.

(4) The documents referred to in the second paragraph of this article shall be submitted to the session of the general meeting. At the start of the debate in the general meeting the management must give an oral explanation of the content of the proposal for the transfer of SE registered office. Before a decision is taken on consent to the transfer of SE registered office the management must inform the shareholders about every significant change in the assets of the company that occurred between the drawing up of the proposal for the transfer of SE registered office and the session of the general meeting.

Article 438

Special requirements for consent of the general meeting to the transfer of SE registered office

If individual shareholders have special rights in accordance with the articles of association, the consent of the general meeting referred to in the first paragraph of Article 632 hereof shall be required for the validity of the resolution.

Article 439

Simplified transfer of SE registered office

If there is only one person holding all the shares of SE or if all shareholders waive their rights to monetary compensation in the form of a notarised statement, the provisions of this act concerning the offer of monetary compensation need not be complied with in the proposal for the transfer of registered office and the review of appropriateness of the amount of monetary compensation. The shareholders may also give the waiver statement orally at the session of the general meeting which decides on consent to the transfer of SE registered office. In this case the statement shall be entered in the minutes of the general meeting.

Article 440

The right of the shareholders to request the acquisition of shares against the payment of monetary compensation

(1) Each shareholder of the company, who at the general meeting of the company deciding on the transfer of SE registered office makes an objection for the record against the resolution giving consent to the transfer of SE registered office may require from the company or another person obliged to pay monetary compensation under the resolution of the transfer of SE registered office to acquire its shares against payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) An offer of monetary compensation shall be binding on the acquiring company for one month from the date of entry of the transfer of SE registered office in the register of the new SE registered office. The obligation to pay monetary compensation shall be barred three years after the transfer of SE registered office at the new registered office. The costs arising from the transfer of shares referred to in the previous paragraph shall be covered by the company or another person obliged to pay monetary compensation under the proposal of the transfer of SE registered office.

(3) Persons entitled to monetary compensation under the first paragraph of this article must be given suitable protection for fulfilment of the obligation to pay monetary compensation.

(4) If the articles of association lay down that the company’s authorisation is needed for the transfer of shares, such shares can be transferred without authorisation from the day of the adoption of resolution giving consent to the transfer of SE registered office to the expiry of the deadline for accepting the offered monetary compensation.

Article 441

Exclusion of reasons to contest; court test of the appropriateness of the amount of monetary compensation

(1) The general meeting resolution of a company giving consent to the transfer of SE registered office cannot be contested for the following reasons:

1. because the amount of the monetary compensation is not appropriate or no cash compensation was offered or it was not offered correctly,

2. because the justification or explanation of the appropriateness of monetary compensation in the management report on the transfer of SE registered office, the report on the review of the appropriateness of the amount of monetary compensation or the supervisory board report on the review of the transfer of SE registered office is not in accordance with this act.

(2) The shareholders, who made an objection for the record against the resolution giving consent to the transfer of SE share may require a court test of the appropriateness of the amount of monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published. The provisions of Article 603 of this Act shall apply mutatis mutandis to the court test procedure of the appropriateness of the amount of monetary compensation.

Article 442

Protection of creditors

The creditors of SE shall have the right to demand protection for their non-matured, uncertain or conditional claims provided they demand such protection within one month of the adoption of the resolution giving consent to the transfer of SE registered office. Creditors may only exercise this right if they demonstrate the probability that the fulfilment of their claims is jeopardised by the transfer of SE registered office by acquisition.

Article 443

Entry of intended transfer of SE registered office in another Member State; issue of certificate

**(1) **The management must apply for the registration of intended transfer of SE registered office in the register.

(2) The proposal for the entry of intended transfer of SE registered office shall be submitted together with:

1. the statement of the company’s management for which the provision of Point 1 of the second paragraph of Article 590 of this Act shall apply mutatis mutandis;

2. proposal for the transfer of SE registered office;

3. the minutes of the general meeting which decided on consent to the transfer of SE registered office;

4. management report on the transfer of SE registered office;

5. annual report for the last financial year;

6. proof that an intended transfer of SE registered office has been published in accordance with the provision of the first paragraph of Article 437 of this Act; and

7. proof on the assurance of all the conditions for exercising the rights of shareholders and creditors.

(3) If the management does not submit the statement referred to in point 1 of the second paragraph of this article because action has been lodged to contest the general meeting resolution giving consent to the transfer of SE registered office or to have it declared null, the provisions of the third, fourth and fifth paragraphs of Article 590 of this Act shall apply mutatis mutandis.

(4) The registration body must test whether all the prescribed legal tasks in respect of the transfer of SE registered office have been carried out and whether all the preconditions for establishing the rights of shareholders to request the acquisition of shares for the payment of monetary compensation have been fulfilled, whether it has been proved that all the shareholders validly waived the right and whether all the preconditions for exercising the creditors’ rights of claiming insurance. If the registration body establishes that all the prescribed legal tasks have been carried out and that all the preconditions in respect of the transfer of SE registered office have been fulfilled, it shall enter the intent to transfer the SE registered office and issue the registration from Paragraph 8 of the Regulation 2157/2001/EC.

(5) Upon the entry of the intended transfer of SE registered office the new SE registered office and the register in which SE is entered shall be recorded. The entry shall be accompanied by an annotation that the certificate from the eighth paragraph of Article 8 of the Regulation 2157/2001/EC has been issued.

(6) After having received the notification of the entry of the transfer of SE registered office in the register in another Member State, the registration body shall ex officio enter the deletion of a company from the register.

Article 444

Registration of the transfer of SE registered office from another Member State to the Republic of Slovenia

(1) The management that wishes to transfer its registered office from another Member State shall propose the transfer of SE registered office for the entry in a register in the Republic of Slovenia.

(2) Besides the data and documents required for the entry of a public limited company pursuant to Article 199 of this Act, the following shall also be attached to the proposal for the entry of the transfer of SE registered office:

1. proposal for the transfer of SE registered office;

2. the minutes of the general meeting which decided on consent to the transfer of SE registered office;

3. management report on the transfer of SE registered office;

4. annual report for the last financial year;

5. certificate of a competent body of a Member State in which the SE had its registered office so far;

6. a copy from the register of the previous registered office which may not be issue prior to the issue of the certificate referred to in the previous Point; and

7. certified signatures of all members of the management and other representatives.

(3) The proposal for the entry of SE registered office must be accompanied by a management’s statement that none of the procedures determined in the fifteenth paragraph of Article 8 of the Regulation 2157/20001/EC have been initiated against the company.

(4) The original and a verified translation of the documents referred to in the second and third paragraph hereunder must be submitted.

(5) After having entered the transfer of SE registered office in the register, the registration body shall ex officio inform the competent body for the entry of companies in the Member State from which the SE registered office is being transferred.

Section 3

FORMATION OF SE

Subsection 1

Formation of SE by merger

Article 445

Offer of monetary compensation in a merger into SE contract

**(1)**Besides the data stipulated under the first paragraph of Article 20 of the Regulation 2157/2001/EC the merger into SE contract (hereinafter in this chapter: merger contract) must, in accordance with Article 17 of the Regulation 2157/2001/EC, also contain the offer for the acquisition of shares of those shareholders which objected, for the record, at the general meeting deciding on the consent to the merger, to the transfer of assets, rights and obligations of the company through the merger to SE with the registered office in another Member State, against the payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) The obligation to ensure monetary compensation can be assumed by SE or another person.

Article 446

Audit of merger into SE

(1) The merger contract must be audited by one or more auditors for each of the companies participating in the merger by acquisition. (2) The provisions of the second, ****third, first sentence of the fourth, sixth, seventh and first sentence of the eighth paragraph of Article 583 of this Act shall apply mutatis mutandis to the audit of the merger contract.

(2) The provisions laid down in the fifth paragraph of Article 583 of this Act shall apply mutatis mutandis for the rafting of the auditor’s report.

Article 447

Publication of merger contract

(1) The merger contract must be submitted to the registration body and a notice thereof must be published in accordance with the provisions of the first and the second sentence of the first paragraph of Article 586 hereof. Such notification must contain the data from Article 21 of the Regulation 2157/2001/EC.

(2) The notification under the previous paragraph must draw the attention of shareholders to their rights under the Article 449 hereof, and the attention of creditors and to their rights under the third paragraph of this article and Article 451 hereof.

(3) Each creditor and shareholder of the company whose assets, rights and obligations are transferred through merger to SE with registered office in another Member State shall be given a copy of the documents referred to under the second paragraph of Article 586 hereof free of charge on request by the following working day at the latest.

Article 448

Simplified merger into SE

If there is only one person holding all the shares of the company or if all shareholders waive their rights to monetary compensation in the form of a notarised statement, the provisions of this act concerning the offer of monetary compensation need not be complied with in the merger contract and the review of appropriateness of the amount of monetary compensation. The shareholders may also give the waiver statement orally at the session of the general meeting which decides on consent to the merger. In this case the statement shall be entered in the minutes of the general meeting.

Article 449

The right of the shareholders to request the acquisition of shares against the payment of monetary compensation

(1) Each shareholder of the company, who at the general meeting of the company deciding on the consent to the merger makes an objection for the record against the resolution giving consent to the merger may require from the company or another person obliged to pay monetary compensation under the merger contract to acquire its shares against payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published. The provisions of Articles 440 and 441 of this Act shall apply mutatis mutandis to the right of shareholders to request the acquisition of shares against the payment of monetary compensation.

Article 450

Exclusion of reasons to contest

Court test of monetary compensation

**(1) **The resolution of the general meeting to decide on the consent to merger cannot be contested for the reasons under Article 604 hereof if the general meetings of all companies with registered offices in other Member States participating in the merger, in which the legislation does not regulate the procedure of court test of exchange ratio, expressly agree in the adoption of the resolution on the consent to merger that:

1. the shareholders of a company with registered office in the Republic of Slovenia may propose a court test of the exchange ratio against SE with the registered office in the Republic of Slovenia; or

2. the shareholders of the acquired company with the registered office in the Republic of Slovenia may propose a court test of the exchange ratio against SE with the registered office in another Member State in accordance with the method and under conditions state in Articles 605 to 615 hereof.

(2) In the case referred to in Point 2 of the previous paragraph the proposal for a court test can only be submitted by those shareholders participating in the general meeting to decide on the consent to merger who announced, for the record, the submission of proposal for a court test or who announced the submission of such proposal to the company within one month after the adoption of the resolution on the consent to merger.

The certificate referred to in the second paragraph of Article 25 of the Regulation 2157/EC must state whether the shareholders announced the submission of the proposal for a court test of the exchange ratio.

(3) The shareholders of an individual acquired company with the registered office in another Member State may submit a proposal for a court test of the exchange ratio if:

1. it stems from the certificate issue by such company that the shareholders validly waived the right to contest the resolution adopted by the general meeting on the consent to merger for the reasons related to the exchange ratio, and

2. all acquired companies with the registered offices other Member States agree to the submission of a proposal for a court test of the exchange ratio.

Article 451

Protection of creditors and holders of special rights

The provisions of Article 442 hereof shall apply mutatis mutandis to the protection of the creditors of the company which transferred its assets, rights and obligations through merger to a SE with the registered office in another Member State.

Article 452

Application for the entry of the transfer of assets, rights and obligations of a company with registered office in the Republic of Slovenia through merger to a SE with the registered office in another Member State; issue of certificate If the reduction in the subscribed capital is carried out by means of a combining of shares, by conversion, stamping or other similar procedure, the company may annul those shares which it has not received despite calling for the shares to be submitted. The company may also annul submitted shares which do not reach the required number in order to be replaced by new shares and which are not put at the disposal of the company for it to realise them for the account of participants. A shareholder cannot be excluded from the company by merging shares; a legal community of such shareholders must be formed per share with the specific closest nominal value of share arising from reduced subscribed capital.

(2) The call for shares to be submitted must contain a warning that shares which are not submitted to the company will be annulled. The annulment shall only be carried out if the call was published in the manner set out in the first paragraph of Article 224 of this Act concerning an extended period. The annulment shall be carried out with an announcement in the company’s newsletter or electronic media. In the announcement the annulled shares shall be identified in such a way that from the announcement it is clear that the shares are annulled.

(3) The company must sell new shares which are issued in place of annulled and not exchanged shares for the account of the shareholders at the official market price with the aid of a broker, or at a public auction if there is no market price.

(4) If it can be reasonably expected that a public auction will not be successful, the shares may be sold at an appropriate location. The time, place and subject of the auction shall be published in the usual local manner. Participants shall be specifically notified unless this is not possible. The publication and the notification must be carried out at least two weeks prior to the auction. The proceeds will be paid to the participants.

Article 377

Registration

(1) The management must notify a reduction in the subscribed capital for entry in the register.

(2) The notification and the entry of the reduction in the subscribed capital may be combined with notification and entry of the resolution on the reduction. If the subscribed capital is reduced by the merger of shares, the registration of decreased subscribed capital can be filed and entered in the register after the completed programme of share merger in accordance with the provision of the previous paragraph hereof.

Article 378

Reduction below the minimum nominal value

The subscribed capital may be reduced below the minimum amount referred to in Article 171 of this Act if this amount is again reached by means of an increase in the subscribed capital, on which a resolution must be adopted simultaneously with the reduction in the subscribed capital, whereby such increase shall not be possible by means of non-cash contributions.

Division 2

Simplified reduction in the subscribed capital

Article 379

Terms and conditions

(1) A reduction in the subscribed capital which is intended to cover a loss brought forward or a net loss for the financial year or for the transfer of amounts to the capital reserves may be carried out in simplified form. The resolution on the reduction in the subscribed capital must state the purpose of the reduction in the subscribed capital.

(2) Simplified reduction in the subscribed capital shall be allowed if:

• there are no profit reserves or they are released beforehand apart from statutory reserves and capital reserves under points 1 to 3 of the first paragraph of Article 64 the sum of which equals 10%, or a higher percentage of the subscribed capital determined in the articles of association after the reduction in the remaining subscribed capital, and

• net profit for the year and net profit brought forward no longer exists.

(3) The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to a reduction in the capital stock in accordance with the preceding paragraphs.

Article 380

Restrictions on the use of profit by simplified reduction in the subscribed capital

A simplified reduction in the subscribed capital may not be used to distribute the profit for appropriation to shareholders or use it for other purposes set out in the articles of association until the total amount of capital reserves under points 1 to 3 of the first paragraph of Article 64 of this Act and the statutory reserves reach the share of the subscribed capital referred to in the third paragraph of Article 64 of this Act after its reduction. Until that time the restriction on the proportion of the net profit which may be transferred annually to the statutory reserves under the fourth paragraph of Article 64 of this Act shall not apply.

Division 3

Reduction in the subscribed capital by means of a withdrawal of shares

Article 381

Terms and conditions

**(1) **A company may withdraw shares compulsorily or through acquisition by the company. A compulsory withdrawal shall be permitted only if it was provided for or permitted in the original articles of association or through an amendment to the articles of association before the shares were acquired or subscribed to.

(2) The provisions on an ordinary reduction in the subscribed capital shall apply to a compulsory withdrawal. The articles of association or a general meeting resolution shall determine the conditions for a compulsory withdrawal and set out the details of how it is carried out. The provisions laid down in the second paragraph of Article 375 of this Act shall apply mutatis mutandis to the payment made to shareholders in the event of a compulsory withdrawal or acquisition of shares for withdrawal.

(3) The provisions on an ordinary reduction in the subscribed capital shall not apply if shares for which the issue value has been fully paid up:

– were placed at the company’s disposal without charge, or

– were withdrawn against the value of the profit for accumulation or the reserves under the articles of association or other profit reserves if their use for such purposes is permitted.

(4) Any decision to reduce the subscribed capital by means of a withdrawal of shares in cases under the preceding paragraph shall be taken by the general meeting. In order for such resolution to be valid it shall require a simple majority of the votes. The articles of association may stipulate a larger majority and lay down other requirements. The resolution shall state the purpose of reducing the capital. The management and the chairman of the supervisory board must notify the resolution for entry in the register.

(5) In cases under the third paragraph of this article an amount shall be allocated to the capital reserves which is equal to the total lowest issue value of the withdrawn shares.

(6) A resolution by the general meeting shall not be required if a compulsory withdrawal of shares is provided for in the articles of association. In the application of the provisions on an ordinary reduction in the subscribed capital a decision by the management to withdraw shares shall be sufficient instead of a resolution by the general meeting.

**Article 382 **

Commencement of validity of a reduction in the subscribed capital

The subscribed capital shall be reduced by the full lowest issue value of the withdrawn shares as of the day the resolution is entered in the register or as of the day the shares are withdrawn. In the case of a compulsory withdrawal provided for in the articles of association, and if the decision to withdraw the shares is not taken by the general meeting, the subscribed capital shall be reduced once the compulsory withdrawal has been carried out. In order for the shares to be withdrawn the company must take action to annul the rights deriving from the shares.

Article 383

Notification of a reduction

The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to the notification of a reduction in the subscribed capital for entry in the court register.

Section 7

SPECIAL PROVISIONS ON THE TREATMENT OF MINORITY SHAREHOLDERS

Subsection 1

Exclusion of minority shareholders from the company

Article 384

Transfer of shares against payment of appropriate monetary compensation

(1) On a proposal of a shareholder whose shareholding represents at least 90% of the company’s subscribed capital (hereinafter: the principal shareholder) shall adopt a resolution on the transfer of shares of shares of the remaining shareholders (hereinafter:

minority shareholder) to the principal shareholder against payment of appropriate monetary compensation.

(2) The provisions laid down in the second to fourth paragraphs of Article 528 of this Act shall also apply mutatis mutandis to the establishment of the amount of shares belonging to the principal shareholder.

Article 385

Monetary compensation

(1) The principal shareholder shall set the amount of monetary compensation by applying mutatis mutandis the provisions of the fifth and the sixth sentence of the second paragraph of Article 556 hereof. The management must make available to the principal shareholder the necessary information and evidence.

(2) Prior to the convocation of the general meeting, the principal shareholder must submit to the management of the company a statement from the bank in which the bank confirms its joint and several liability to meet the obligations of the principal shareholder, namely, to pay monetary compensation to the minority shareholders for the acquired shares immediately after the registration of the transfer of shares in the appropriate register.

Article 386

Preparing and holding the general meeting

**(1) **The publication of the agenda of the general meeting to decide on the transfer of shares to the principal shareholder must contain:

• name and registered office of the company or name, surname and address of the principal shareholder; and

• the amount of monetary compensation offered by the principal shareholder.

(2) The principal shareholder shall prepare a written report for the general meeting in which it shall explain the assumptions for the transfer of shares and the appropriate amount of monetary compensation. The appropriate amount of monetary compensation offered by the principal shareholder shall be reviewed by one or more auditors appointed by the court on a proposal by the principal shareholder. The provisions of Article 583 of this Act shall apply mutatis mutandis to the review of the appropriateness of the amount of monetary compensation. In their reports, the principal shareholder and the auditors shall not be required to disclose the information referred to in the first and third indents of the second paragraph of Article 305 of this Act. An auditor’s report shall not be required if it is waived by all minority shareholders in the form of a statement. Such waiver statements must be given in the form of a notarial record.

(3) Every shareholder shall be given access to the following, prior to the general meeting, at the registered office of the company:

– proposal on the transfer of shares;

• annual reports for the last three financial years;

• a written statement of the principal shareholder from the second paragraph of this Article; and

• the auditor’s report from the second paragraph of this Article.

(4) All shareholders shall be given on request and free of charge a copy of the documents referred to in the first, third and fourth indent of the previous paragraph by the following working day at the latest.

(5) The documents referred to in the third paragraph of this article shall be submitted to the session of the general meeting. At the beginning of the discussion at the general meeting, the principal shareholder must orally explain the proposal of the resolution for the transfer of shares and the method of calculating the amount of monetary compensation. Before a decision is taken on consent to the transfer of shares to the principal shareholder, the principal shareholder must inform the minority shareholders of all significant changes in the assets of the company that occurred between the drawing up of the resolution on the transfer of shares and the session of the general meeting.Significant changes shall, in particular, be those meaning that a different monetary compensation would be appropriate.

Article 387

Entry of the resolution on the transfer of shares; legal consequences

**(1) **The management must submit an application for the entry of the resolution on the transfer of shares in the register. A notarised copy of the minutes of the general meeting which decided on the exclusion of minority shareholders and the relevant enclosures shall be attached to the proposal.

(2) For the proposal of the entry of the resolution on the transfer of shares to the principal shareholder, its enclosures and the process of deciding on the proposal, the provisions of Point 1 of the second paragraph and third to fifth paragraph of Article 590 hereof shall apply mutatis mutandis.

(3) With the entry of the resolution on the transfer of shares in the register, all shares held by minority shareholders shall be transferred to the principal shareholder. The shares in book-entry form shall be deposited by the clearing and depository house on a special account so that the minority shareholders shall not be able to dispose of them; if the company issued share certificates, these shall only be used as evidence for exercising the right to monetary compensation until they are delivered to the principal shareholder.

(4) A minority shareholder can keep the legal interest if they filed a lawsuit for which legal interest is requested and which stems from the holdership of the company’s shares until the date of the general meeting to decide on the transfer of shares to the principal shareholder.

Article 388

Court test of monetary compensation

**(1) **The resolution of the general meeting on the consent to the transfer of shares to the principal shareholder cannot be contested if the monetary compensation offered by the principal shareholder, referred to in Article 385 of this Act, is inappropriate or if it has not been offered or not been offered correctly.

(2) If the compensation offered is inappropriate, any minority shareholder may propose that appropriate compensation be determined by the court. The same shall apply if the principal shareholder did not offer compensation or did not offer it correctly. The provisions laid down in the second paragraph and Point 1 of the third paragraph of Article 605 and in Articles 606 to 615 of this Act shall apply mutatis mutandis to the procedure for determining appropriate monetary compensation through court.

Subsection 2

The right of minority shareholders to withdraw from the company

Article 389

Request for the purchase of all the remaining shares; appropriate monetary compensation

**(1) **Upon a request of one or more minority shareholders, the principal shareholder must, within a month of receiving the request, offer such individual or more shareholders appropriate monetary compensation for the purchase of all the remaining shares of each individual minority shareholder.

(2) The provisions of the first paragraph of Article 385 and the second paragraph of Article 388 of this Act shall apply mutatis mutandis to the determination of appropriate amount of monetary compensation.

Section 8

NULLITY AND CONTESTABILITY

Article 390

Reasons for nullity

In addition to the cases set out in the first and second paragraphs in connection with the third paragraph of Article 343, in Article 363 and in the second paragraph of Article 368 of this Act, a general meeting resolution shall also be null and void:

– if it was adopted at a general meeting which was not convened in accordance with the second paragraph of Article 295 of this Act, unless all the shareholders participated or were properly represented in the general meeting;

– if it has not been confirmed in accordance with the first and second paragraphs of Article 304 of this Act;

– if it is not compatible with the essence of the company or if in terms of its content it is in violation of the provisions of this Act which are used solely or predominantly to protect the creditors of a company or are otherwise in the public interest;

– if the content of the resolution is in violation of morals or public order;

– a general meeting resolution referred to in Article 378 of this Act shall be null and void if within six months of its adoption a resolution on an increase in the subscribed capital and the execution of the increase in the subscribed capital have not been entered in the register; this period shall not run while a procedure to establish nullity or contestability is in progress before the court.

Article 391

Time limits for establishing nullity

(1) Nullity of a resolution passed by the general meeting may no longer be established for the reason set out in the second indent of the first paragraph of Article 359 of this Act after it has been entered in the register.

(2) Nullity of a resolution passed by the general meeting may no longer be established for the reasons set out in the first, third, fourth or fifth indent of the first paragraph of Article 359 of this Act more than three years after it has been entered in the register provided no action has been lodged within this period to establish the nullity of the resolution.

Article 392

Nullity of elections

In addition to the circumstances described in Article 390 of this Act, the election of members of the supervisory board or the board of directors shall also be null and void:

– if the supervisory board or the board of directors is composed in contravention of the law or the articles of association;

– if the general meeting elects a person who was not proposed in accordance with the law or the articles of association; or

– if more members are elected than provided for by law or the articles of association.

Article 393

Procedure for establishing nullity

The procedure for establishing nullity shall be rapid.

Article 394

Legal consequences of nullity

A resolution established as null and void shall have no legal consequences. Anyone who has received anything on the basis of a resolution established as null and void must repay the entire value together with costs to the company.

Article 395

Reasons for contestability; convalidation of challenged resolutions

(1) A general meeting resolution shall be contestable:

1. if the content of the resolution is in violation of the law or the articles of association, or

2. if provisions of the law or the articles of association were violated at the adoption of the resolution and these violations affect the validity of the resolution (for example, an insufficient majority voted in favour of adopting the resolution).

(2) Notwithstanding point two of the first paragraph of this article a general meeting resolution shall always be contestable if the shareholders’ right to be informed under Article 305 of this Act was violated in connection with the procedure to adopt the resolution.

(3) A resolution may also be contested on the basis that a shareholder in exercising his voting right attempted to secure for himself or for a third party special advantages to the detriment of the company or the other shareholders, if that purpose can be achieved on the basis of the adopted general meeting resolution. This shall not apply where appropriate compensation for such damage is provided to other shareholders pursuant to the resolution.

(4) A general meeting resolution may not be contested on the basis of a violation of the provisions of Article 302 of this Act.

(5) A contested general meeting resolution may no longer be annulled once the general meeting has confirmed the resolution in a new resolution provided no action has been lodged within the time limit for its annulment or to establish its nullity, or where such action has been withdrawn or where a claim for annulment of the new resolution or for establishing its nullity has been refused as final.

(6) Notwithstanding the fifth paragraph of this article a person referred to in the seventh paragraph of this article who demonstrates a legal interest in having the resolution annulled for the period until the adoption of a new (confirming) resolution, may ask the court to establish that the contested resolution was not valid until the adoption of the new (confirming) resolution.

(7) A general meeting resolution may be contested by:

– any shareholder under the conditions laid down in this Act;

• the management,

– any member of the management or supervisory body if by implementing the general meeting resolution the members would be committing a criminal offence or acting in contravention of the law.

Article 396

Contesting suit

(1) A contesting suit shall be lodged within one month. The one-month period shall begin to run:

– if the plaintiff participated in the general meeting, on the day the general meeting ended;

– if the plaintiff did not participate in the general meeting, on the day he learned of the resolution or should have learned of it.

(2) If the resolution was published, the one-month period shall begin on the day of publication.

Article 397

Notification of intention to contest

(1) A shareholder who was present at the general meeting may only contest a resolution if at the general meeting he immediately informed the general meeting for the record of his intention to lodge a contesting suit; and a shareholder who was not present may contest a resolution only in the case where he was illegally prevented from attending the general meeting or if he was not correctly invited to the general meeting or if the general meeting decided an issue which was not on the agenda.

(2) The management must publish notification that a contesting suit has been lodged in the same manner in which the contested resolution must be published.

Article 398

Effect of an annulled resolution

If the court annuls a resolution passed by the general meeting or declares it to be null, that ruling shall take effect against all shareholders and members of the management or supervisory body. In the case of a resolution which is entered in the register, the content of the court ruling shall be entered ex officio. The management must publish the content of the ruling.

Article 399

Contestability of a resolution on the use of the profit for appropriation

(1) A general meeting resolution on the use of the profit for appropriation may be contested if it is in contravention of the law or the articles of association or if the general meeting decided not to distribute profit to the shareholders amounting to at least 4 per cent of the subscribed capital where in the judgement of a good manager this was not necessary given the circumstances in which the company is operating.

(2) A contesting suit in respect of a general meeting resolution on the use of the profit for appropriation may be lodged by shareholders whose combined interest is at least onetwentieth of the subscribed capital or a lowest issue value of 400,000 euros. If the court finds that there exist circumstances which justify the division of profit for appropriation it shall amend the resolution adopted by the general meeting upon the request of the shareholders.

Article 400

Contesting a resolution on an increase in the subscribed capital

(1) A resolution on an increase in the subscribed capital by contributions may be contested in accordance with the provisions laid down in Article 395 of this Act.

(2) If a priority right of shareholders has been wholly or partly excluded a resolution may also be contested on the basis that the issue value or the minimum amount beneath which new shares may not be issued is set disproportionately low in the resolution on an increase in the subscribed capital. This shall not apply if the new shares are acquired by a third party with the obligation to offer them to shareholders.

Article 401

Nullity of the annual report and contestability of a resolution on the adoption of the annual report

**(1) **The annual report shall be null and void:

– if its content is in contravention of the provisions of this Act which are used exclusively or primarily to protect the creditors of the company or are otherwise in the public interest;

– if under this Act it should have been audited but an audit has not been performed or has not been performed in compliance with the method and conditions laid down in the law regulating auditing;

– if the provisions of this Act or the articles of association on the creation (increase) or use (reduction) of the capital reserves and profit reserves were violated in the procedure for the adoption of the annual report.

(2) An annual report whose adoption has been decided by the management or supervisory body shall also be null and void if in the adoption of the annual report the supervisory board did not act in accordance with the first and second paragraphs of Article 282 of this Act.

(3) When, in adopting the annual report, the general meeting has amended a compiled annual report in accordance with the second sentence of the third paragraph of Article 293 the annual report shall also be null and void if within two weeks of its adoption the amendments to the annual report have not been reviewed by an auditor or if the auditor who reviewed the amendments to the annual report has not given a positive opinion in respect of these amendments.

(4) An annual report which has been adopted by the general meeting shall also be null and void when the general meeting resolution on the adoption of the annual report is null and void for the reasons laid down in the first or second indent of Article 390 of this Act.

(5) A general meeting resolution on the adoption of the annual report may be contested in accordance with the provisions laid down in Article 395 of this Act but may not be contested on the basis that the content of the annual report is not in conformity with the law or the articles of association.

Section 9

DISSOLUTION OF A COMPANY

Subsection 1

Ordinary dissolution

Article 402

Reasons for dissolution

(1) A company shall be dissolved:

– upon the expiry of the period for which it was formed ;

– by resolution of the general meeting, which must be adopted with a majority of at least three-quarters of the subscribed capital represented; the articles of association may stipulate a larger majority and lay down other requirements;

– if the management is inactive for more than 12 months;

– if the court establishes that the corporation is null and void;

– if the company goes bankruptcy;

– on the basis of a court ruling;

– when the company is merged with another company; or

– if the company’s subscribed capital is reduced below the minimum amount stated in Article 171 of this Act, other than in the case under Article 378 of this Act.

(2) The articles of association may determine other reasons for the company to be dissolved.

(3) Shareholders whose combined interest accounts for at least one-twentieth of the subscribed capital and each member of the management or supervisory body may lodge a suit requiring the court to decide on the dissolution of the company if it believes that that the company’s goals cannot satisfactorily be achieved, or that other good reasons exist for the dissolution of the company, in particular, defects in the provisions of the articles of association concerning the amount of subscribed capital, the definition of shares or the activity of the company which are not in conformity with this Act. If the defects can be remedied the suit may only be lodged after the person entitled to lodge the suit has called on the company to remedy the defects and the company has not taken action within three months or the defects have not been remedied within one year.

Article 403

Adoption of a resolution on the dissolution of a company and the commencement of liquidation

(1) In the cases under the first and second indents of the first paragraph of the preceding article the resolution on the dissolution of the company and commencement of liquidation (liquidation resolution) shall be adopted by the general meeting.

(2) In the case under the first indent of the first paragraph of the preceding paragraph the general meeting must adopt a liquidation resolution within 30 days of the expiry of the period set out in the articles of association.

(3) In the cases under the third, fourth and sixth indents of the first paragraph of the preceding article the liquidation resolution shall be issued by the court.

Article 404

Commencement of the liquidation procedure

(1) The procedure for the liquidation of a company based on a liquidation resolution for the reasons stated in the first and second indents of the first paragraph of Article 402 of this Act shall be carried out by the company.

(2) In the cases under the third paragraph of the preceding article the liquidation procedure shall be carried out by the court.

(3) In the case under the third indent of the first paragraph of Article 402 of this Act a proposal for the dissolution of the company may be lodged with the court by a creditor or by shareholders accounting for at least one-tenth of the subscribed capital.

(4) In the case under the sixth indent of the first paragraph of Article 402 of this Act a creditor or any shareholder may lodge a proposal for dissolution with the court. The court shall pass a liquidation resolution if the shareholders do not provide subscribed capital in the amount of the statutory minimum within a time limit determined by the court, which may not be shorter than three months.

(5) In the case under the third and eighth indents of the first paragraph of Article 402 of this Act the liquidation procedure shall be carried out by the court ex officio. The costs of liquidation shall be covered from the assets of the company, and if the assets are not sufficient then also from the assets of the founders.

Article 405

Content of a liquidation resolution

(1) A liquidation resolution shall state the following details:

– the registered name and registered office of the company;

– the body which adopted the resolution;

– the reason for the dissolution;

– the time limit within which creditors and shareholders holding bearer shares must register their claims; the time limit may not be less than 30 days from the date of publication of the resolution; and

– the name, surname and address or the registered name and registered office of the liquidator.

(2) A liquidation resolution may also contain other details connected with the dissolution and liquidation of the company.

(3) The body which adopts the liquidation resolution shall send the resolution to the registration body in order for the commencement of liquidation to be entered in the register.

Article 406

Liquidation procedure

(1) The liquidation procedure shall be carried out after the entry of the commencement of liquidation in the register.

(2) Where there are no other specific provisions in this section, the provisions laid down in this Act applying to a company before the adoption of a liquidation resolution shall continue to apply to the company until the end of the liquidation.

Article 407

Designation in the registered name

After the entry of the commencement of liquidation in the register the company must use the addition “in liquidation” in its registered name.

Article 408

Bodies in the liquidation procedure

(1) Liquidation shall be carried out by one or more liquidators.

(2) The liquidators shall be members of the management unless otherwise provided by the articles of association, the general meeting or the liquidation resolution.

(3) At the proposal of the supervisory board, the board of directors or shareholders accounting for one-twentieth of the subscribed capital, and where good reasons exist, a liquidator shall be appointed by the court.

(4) The provisions laid down in this Act and in the articles of association on decisionmaking by the management shall apply mutatis mutandis to decision-making by the liquidators unless otherwise provided in the liquidation resolution.

Article 409

Liquidation company

The liquidator may also be a legal person (liquidation undertaking).

Article 410

Declaration by the liquidator

A liquidator must submit a written declaration to the effect that he will carry out all tasks connected with the liquidation conscientiously and fairly.

Article 411

Dismissal of a liquidator

The body which appointed the liquidator may dismiss him at any time without explanation.

Article 412

Powers of a liquidator

A liquidator shall:

– represent the company;

– compile an opening liquidation balance sheet;

– conclude unfinished business;

– pay off the claims of creditors;

– publish an invitation to creditors for them to register their claims with him within a time limit which may not be less than 30 days from the day on which the invitation was published;

– recover the claims of the company;

– realise the liquidation estate to the extent necessary in order to pay off creditors;

– prepare a proposed report on the progress of the liquidation procedure and the division of assets;

– propose the deletion of the company from the register; and

– carry out other tasks connected with the liquidation as laid down in law, the articles of association or the resolution on the liquidation of the company.

Article 413

Continuation of activity

The liquidator shall be entitled to continue the company’s activity by concluding new operations only with the approval of the body which adopted the liquidation resolution.

Article 414

Stopping the liquidation procedure and continuing with a bankruptcy procedure

If on the basis of the registered claims the liquidator establishes that the assets of the company are not sufficient to pay off all the claims of creditors in full including statutory interest, the liquidation administrator must stop the liquidation procedure without delay and submit a proposal for the commencement of a bankruptcy procedure.

Article 415

Report on the progress of the procedure and proposal for the division of assets

After the company’s debts have been paid off the liquidator shall prepare a report on the progress of the liquidation and a proposal for the division of the assets, unless otherwise provided in the liquidation resolution.

Article 416

Adoption of a report on the progress of the procedure and the division of assets

(1) The body which adopted the liquidation resolution shall vote on the proposed report on the progress of the liquidation procedure and the proposal for the division of assets, unless otherwise provided for in the resolution.

(2) If the general meeting is responsible for adopting the report and the resolution on the division of assets and yet in spite of being convened twice it has not met or did not have a quorum, it shall be deemed that the proposal drawn up by the liquidator is adopted by resolution of the general meeting.

Article 417

Period for division of assets

(1) Pursuant to a resolution on the division of assets the liquidator shall divide the assets within 30 days.

(2) If the resolution under the preceding paragraph was adopted by the court the 30-day period shall begin when the resolution becomes final .

Article 418

Division of assets

**(1) **After repayment of all the company’s liabilities the remaining assets shall be divided among the shareholders in proportion to their contributions. Contributions that have not yet been paid in must be paid in before the division in accordance with the articles of association.

(2) When the division of assets has been completed the liquidator shall deliver to the registration body the report on the progress of the liquidation procedure adopted at the general meeting and the general meeting resolution on the division of assets, shall declare that all the assets have been divided in accordance with the resolution on the division of assets and propose the deletion of the company from the register.

Article 419

(Damage liability)

(1) After the deletion of the company from the register it shall not be possible to contest the actions of the liquidator but compensation for damage may be claimed from the liquidator .

(2) The liquidator shall be liable for damage which he caused to a creditor during the liquidation procedure up to the value of five times the payment which he received for his work. If this amount is insufficient to pay for the damage caused, all the shareholders shall be jointly and severally liable up to the amount of the contributions paid out of the liquidation estate. It shall not be considered damage if a creditor did not receive payment for his claim because he did not register it in time and the liquidator was not and could not have been aware of it.

(3) The provisions laid down in the preceding paragraph shall not apply to damage caused by the liquidator to shareholders. For such damage the liquidator shall be liable in accordance with the general rules on damage liability.

(4) Compensation claim against a liquidator shall be time-barred one year from the day on which the company was deleted from the register.

(5) Where there is more than one liquidator, they shall be jointly and severally liable.

Article 420

Claims of shareholders

In the liquidation procedure the shareholders may pursue their claims arising from legal transactions with the company.

Article 421

Protection of creditors

**(1) **The assets may not be divided among the shareholders until six months have elapsed since the publication of the final announcement under Article 405 of this Act.

(2) The liquidator shall be obliged to provide appropriate insurance for the repayment of claims which have not yet matured and known claims which a creditor has not registered.

Article 422

Continuation of the company

**(1) **If the liquidation resolution was adopted for the reasons set out in the first or second indents of the first paragraph of Article 402 of this Act, the general meeting may decide, before the start of the division of assets among the shareholders, by a majority of at least three-quarters of the subscribed capital represented, that the company shall continue to operate.

(2) In this case the liquidator must propose the deletion from the register of the entry of the commencement of liquidation and attach the general meeting resolution to the proposal.

Article 423

Remuneration of the liquidator

(1) The liquidator shall have the right to reimbursement of costs and to payment for his work from the assets of the company. The amount of the payment shall be determined by the general meeting or by the court.

(2) The payment for work and reimbursement of costs shall be made to the liquidator after the payment of liabilities to creditors but before the division of the assets among the shareholders.

Article 424

Storage of books of account

**(1) **Books of account, accounts documents and the documentation on the liquidation procedure must be stored by one of the shareholders, appointed by the liquidator , or by an organisation determined by law.

(2) Creditors and shareholders shall have the right to examine the documents referred to in the preceding paragraph for three years after the conclusion of the liquidation procedure.

(3) An entry must be made in the register stating whom the documents referred to in the first paragraph of this article are stored with.

2. Subsection 3

Dissolution of a company by simplified procedure

Article 425

Terms and conditions

(1) A company may be dissolved by simplified procedure without going into liquidation if all the shareholders propose to the registration body the deletion of the company from the register without liquidation and attach with the proposal a resolution on the dissolution of the company by simplified procedure and a declaration by all the shareholders, verified by a notary, to the effect that all the company’s liabilities have been settled, that all relations with employees have been settled and that they are assuming the liability to pay any potential outstanding liabilities of the company.

(2) Creditors may pursue their claims on the shareholders who submitted the declaration under the preceding paragraph within one year of the announcement of the deletion of the company from the register.

(3) The shareholders shall be jointly and severally liable with all their assets for liabilities under the preceding paragraph.

(4) The registration body may require the shareholders to demonstrate the truth of their declaration under the first paragraph of this article. The registration body may also require other forms of insurance for the assumed liability to pay the debts.

Article 426

Content of a resolution on the dissolution of a company by simplified procedure

A resolution on the dissolution of a company by simplified procedure shall state the registered name and registered office, the body which adopted the resolution on the dissolution, an indication that the dissolution is being conducted by simplified procedure, the number of shareholders and their names, surnames and addresses, and a proposal for the division of assets.

Article 427

Publication of a dissolution resolution and the assumption of liabilities by the shareholders

(1) The registration body shall publish the dissolution resolution together with the names, surnames and addresses or registered names or registered offices of all the shareholders who have assumed the liability to pay any potential outstanding liabilities to creditors.

(2) This notification shall also state that an appeal against the dissolution resolution shall be permitted within 15 days and that otherwise the registration body will pass a resolution on the deletion of the company from the register.

Article 428

Appeal against a dissolution resolution

(1) Shareholders, creditors or the competent state bodies may lodge an appeal against a resolution on the dissolution of a company by simplified procedure within 15 days of the publication of the resolution.

(2) The appeal shall be decided upon by the registration body. If the registration body establishes that the appeal is justified and that creditors or shareholders would suffer damage, it shall annul the resolution on dissolution by simplified procedure and notify the bodies of the company, which shall be obliged to continue the liquidation procedure in accordance with this Act, or given the circumstances adopt a dissolution resolution itself.

(3) Upon the annulment of the resolution on dissolution by simplified procedure the declarations by the shareholders on the assumption of liability for the liabilities of the company shall lose their legal effect.

(4) The registration body shall inform the public of the annulment of the resolution on the dissolution of the company by simplified procedure in the same manner as for the dissolution resolution.

Article 429

Deletion of a company from the register

(1) If an appeal is not lodged or if an appeal is lodged but is rejected by the registration body, the registration body shall issue a resolution on the deletion of the company from the register and shall publish it. An appeal shall be permitted against this resolution within 15 days of the date of publication.

(2) The registration of the deletion of the company from the register shall also state the names, surnames and addresses or registered names and registered offices of shareholders who assumed the liability to pay any potential liabilities of the deleted company.

Chapter 5

EUROPEAN PUBLIC LIMITED COMPANY (SE)

Section 1

GENERAL PROVISIONS

Article 430

The purpose of special provisions on SE

For the purpose of implementation of Regulation 2157/2001/EC this chapter defines the method of foundation, management, transfer of registered office and dissolution of European public limited company (hereinafter: SE).

Article 431

Entry in the register

**(1) **SE shall be entered in the register. The provisions laid down in this Act on the entry of a public limited company in the register shall apply mutatis mutandis to the application for the entry of a public limited company in the register.

(2) The application for entry of SE in the register must be accompanied by:

• agreement on worker participation in the management of SE according to the method and under conditions stipulated by law regulating the participation of workers in the management of SE; or

• resolution on the termination of negotiations for the conclusion of the agreement referred to in the previous indent in accordance with the law regulating the participation of workers in the management of SE; or

• the statement of the members of the management that the agreement referred to in the first indent of this paragraph has not been reached within the appropriate deadline.

Article 432

**Publication of notifications by SE in the Official Journal of the European Union **

The issuer of the Official Gazette of the Republic of Slovenia must inform the body competent for the publications in the Official Journal of the European Union about the data or notifications published in the Official Journal of the European Union pursuant to Article 14 of the Regulation 2157/2001/EC within one month of the publication in the Official Gazette of the Republic of Slovenia.

Article 433

Registered office of SE

**(1) **The articles of association shall lay own the registered office of SE in accordance with Article 30 of this Act.

(2) If the management of SE with registered office in the Republic of Slovenia transfers its operations to another Member State, the registration body shall ask the company to reestablish its operations in the Republic of Slovenia or transfer its registered office in accordance with Article 8 of the Regulation 2157/2001/EC within the appropriate deadline. If the company fails to establish management in the Republic of Slovenia or transfer the registered office in accordance with Article 8 of the Regulation 2157/2001/EC within the deadline set by the court, the registration body shall issue the resolution on the dissolution of the company. An appeal may be filed against the resolution on the dissolution of the company which shall suspend the execution of the resolution.

Section 2

TRANSFER OF SE REGISTERED OFFICE

Article 434

Offer of monetary compensation in the proposal for the transfer of registered office

(1) The proposal for the transfer of SE to another Member State must, besides the data stated in the second paragraph of Article 8 of the Regulation 2157/2001/EC, also contain the offer for the acquisition of shares of those shareholders which objected, for the record, to the resolution on the transfer at the general meeting deciding on the transfer of the registered office, against the payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) The obligation to ensure monetary compensation can be assumed by SE or another person.

Article 435

Review of the appropriateness of the amount of monetary compensation

**(1) **The appropriateness of the amount of monetary compensation offered proposal on the transfer of SE registered office must be verified by an auditor.

(2) The provisions of the second, fourth, sixth, seventh and eighth paragraph of Article 583 of this Act shall apply mutatis mutandis to the review of the appropriateness of the amount of monetary compensation.

(3) The auditor’s report on the appropriateness of monetary compensation must contain an opinion on whether the offered monetary compensation is an appropriate compensation for the acquired shares. The provisions laid down in the fifth paragraph of Article 583 of this Act shall apply mutatis mutandis for the auditor’s report.

**Article 436 **

Review of the transfer of SE registered office by the supervisory board

On the basis of the management report on the transfer of SE registered office and the report on the audit of the appropriateness of monetary compensation the supervisory board must examine the intended transfer of SE registered office and draw up a written report. In the report on the review of the transfer of SE registered office the supervisory board shall not be required to disclose the information referred to in the first and third indents of the second paragraph of Article 305 of this Act.

Article 437

Notification of the proposal for the transfer of SE registered office)

(1) At least two months prior to the date of a session of the general meeting which is to decide on the transfer of SE registered office in another Member State, the management must submit to the registration body the proposal of the transfer of SE registered office which has been reviewed by the supervisory board of this company. The notification on the submission of the proposal for the transfer of SE registered office to the registration body shall be published by the company. The notification must draw the attention of shareholders to their rights under the second and third paragraphs of this article and Article 440 hereof, and the attention of creditors and to their rights under the second and third paragraphs of this article and Article 442 hereof.

(2) At least one month prior to the session of the general meeting that is to decide on the transfer of SE registered office the following documents shall be made available for inspection by the shareholders at the registered office of the company, besides the documents determined in the fourth paragraph of Article 8 of the Regulation 2157/2001/EC:

1. report on the review of the appropriateness of the amount of monetary compensation;

2. the report of the supervisory board on a review of the transfer of registered office; and

3. annual report for the last financial year;

(3) All shareholders and creditors shall be given a copy of these documents free of charge on request by the following working day at the latest.

(4) The documents referred to in the second paragraph of this article shall be submitted to the session of the general meeting. At the start of the debate in the general meeting the management must give an oral explanation of the content of the proposal for the transfer of SE registered office. Before a decision is taken on consent to the transfer of SE registered office the management must inform the shareholders about every significant change in the assets of the company that occurred between the drawing up of the proposal for the transfer of SE registered office and the session of the general meeting.

Article 438

Special requirements for consent of the general meeting to the transfer of SE registered office

If individual shareholders have special rights in accordance with the articles of association, the consent of the general meeting referred to in the first paragraph of Article 632 hereof shall be required for the validity of the resolution.

Article 439

Simplified transfer of SE registered office

If there is only one person holding all the shares of SE or if all shareholders waive their rights to monetary compensation in the form of a notarised statement, the provisions of this act concerning the offer of monetary compensation need not be complied with in the proposal for the transfer of registered office and the review of appropriateness of the amount of monetary compensation. The shareholders may also give the waiver statement orally at the session of the general meeting which decides on consent to the transfer of SE registered office. In this case the statement shall be entered in the minutes of the general meeting.

Article 440

The right of the shareholders to request the acquisition of shares against the payment of monetary compensation

(1) Each shareholder of the company, who at the general meeting of the company deciding on the transfer of SE registered office makes an objection for the record against the resolution giving consent to the transfer of SE registered office may require from the company or another person obliged to pay monetary compensation under the resolution of the transfer of SE registered office to acquire its shares against payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) An offer of monetary compensation shall be binding on the acquiring company for one month from the date of entry of the transfer of SE registered office in the register of the new SE registered office. The obligation to pay monetary compensation shall be barred three years after the transfer of SE registered office at the new registered office. The costs arising from the transfer of shares referred to in the previous paragraph shall be covered by the company or another person obliged to pay monetary compensation under the proposal of the transfer of SE registered office.

(3) Persons entitled to monetary compensation under the first paragraph of this article must be given suitable protection for fulfilment of the obligation to pay monetary compensation.

(4) If the articles of association lay down that the company’s authorisation is needed for the transfer of shares, such shares can be transferred without authorisation from the day of the adoption of resolution giving consent to the transfer of SE registered office to the expiry of the deadline for accepting the offered monetary compensation.

Article 441

Exclusion of reasons to contest; court test of the appropriateness of the amount of monetary compensation

(1) The general meeting resolution of a company giving consent to the transfer of SE registered office cannot be contested for the following reasons:

1. because the amount of the monetary compensation is not appropriate or no cash compensation was offered or it was not offered correctly,

2. because the justification or explanation of the appropriateness of monetary compensation in the management report on the transfer of SE registered office, the report on the review of the appropriateness of the amount of monetary compensation or the supervisory board report on the review of the transfer of SE registered office is not in accordance with this act.

(2) The shareholders, who made an objection for the record against the resolution giving consent to the transfer of SE share may require a court test of the appropriateness of the amount of monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published. The provisions of Article 603 of this Act shall apply mutatis mutandis to the court test procedure of the appropriateness of the amount of monetary compensation.

Article 442

Protection of creditors

The creditors of SE shall have the right to demand protection for their non-matured, uncertain or conditional claims provided they demand such protection within one month of the adoption of the resolution giving consent to the transfer of SE registered office. Creditors may only exercise this right if they demonstrate the probability that the fulfilment of their claims is jeopardised by the transfer of SE registered office by acquisition.

Article 443

Entry of intended transfer of SE registered office in another Member State; issue of certificate

(1) The management must apply for the registration of intended transfer of SE registered office in the register.

(2) The proposal for the entry of intended transfer of SE registered office shall be submitted together with:

1. the statement of the company’s management for which the provision of Point 1 of the second paragraph of Article 590 of this Act shall apply mutatis mutandis;

2. proposal for the transfer of SE registered office;

3. the minutes of the general meeting which decided on consent to the transfer of SE registered office;

4. management report on the transfer of SE registered office;

5. annual report for the last financial year;

6. proof that an intended transfer of SE registered office has been published in accordance with the provision of the first paragraph of Article 437 of this Act; and

7. proof on the assurance of all the conditions for exercising the rights of shareholders and creditors.

(3) If the management does not submit the statement referred to in point 1 of the second paragraph of this article because action has been lodged to contest the general meeting resolution giving consent to the transfer of SE registered office or to have it declared null, the provisions of the third, fourth and fifth paragraphs of Article 590 of this Act shall apply mutatis mutandis.

(4) The registration body must test whether all the prescribed legal tasks in respect of the transfer of SE registered office have been carried out and whether all the preconditions for establishing the rights of shareholders to request the acquisition of shares for the payment of monetary compensation have been fulfilled, whether it has been proved that all the shareholders validly waived the right and whether all the preconditions for exercising the creditors’ rights of claiming insurance. If the registration body establishes that all the prescribed legal tasks have been carried out and that all the preconditions in respect of the transfer of SE registered office have been fulfilled, it shall enter the intent to transfer the SE registered office and issue the registration from Paragraph 8 of the Regulation 2157/2001/EC.

(5) Upon the entry of the intended transfer of SE registered office the new SE registered office and the register in which SE is entered shall be recorded. The entry shall be accompanied by an annotation that the certificate from the eighth paragraph of Article 8 of the Regulation 2157/2001/EC has been issued.

(6) After having received the notification of the entry of the transfer of SE registered office in the register in another Member State, the registration body shall ex officio enter the deletion of a company from the register.

Article 444

Registration of the transfer of SE registered office from another Member State to the Republic of Slovenia

(1) The management that wishes to transfer its registered office from another Member State shall propose the transfer of SE registered office for the entry in a register in the Republic of Slovenia.

(2) Besides the data and documents required for the entry of a public limited company pursuant to Article 199 of this Act, the following shall also be attached to the proposal for the entry of the transfer of SE registered office:

1. proposal for the transfer of SE registered office;

2. the minutes of the general meeting which decided on consent to the transfer of SE registered office;

3. management report on the transfer of SE registered office;

4. annual report for the last financial year;

5. certificate of a competent body of a Member State in which the SE had its registered office so far;

6. a copy from the register of the previous registered office which may not be issue prior to the issue of the certificate referred to in the previous Point; and

7. certified signatures of all members of the management and other representatives.

(3) The proposal for the entry of SE registered office must be accompanied by a management’s statement that none of the procedures determined in the fifteenth paragraph of Article 8 of the Regulation 2157/20001/EC have been initiated against the company.

(4) The original and a verified translation of the documents referred to in the second and third paragraph hereunder must be submitted.

(5) After having entered the transfer of SE registered office in the register, the registration body shall ex officio inform the competent body for the entry of companies in the Member State from which the SE registered office is being transferred.

Section 3

FORMATION OF SE

Subsection 1

Formation of SE by merger

Article 445

Offer of monetary compensation in a merger into SE contract

(1) Besides the data stipulated under the first paragraph of Article 20 of the Regulation 2157/2001/EC the merger into SE contract (hereinafter in this chapter: merger contract) must, in accordance with Article 17 of the Regulation 2157/2001/EC, also contain the offer for the acquisition of shares of those shareholders which objected, for the record, at the general meeting deciding on the consent to the merger, to the transfer of assets, rights and obligations of the company through the merger to SE with the registered office in another Member State, against the payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published.

(2) The obligation to ensure monetary compensation can be assumed by SE or another person.

Article 446

Audit of merger into SE

**(1) **The merger contract must be audited by one or more auditors for each of the companies participating in the merger by acquisition. (2) The provisions of the second, third, first sentence of the fourth, sixth, seventh and first sentence of the eighth paragraph of Article 583 of this Act shall apply mutatis mutandis to the audit of the merger contract.

(2) The provisions laid down in the fifth paragraph of Article 583 of this Act shall apply mutatis mutandis for the rafting of the auditor’s report.

Article 447

Publication of merger contract

(1) The merger contract must be submitted to the registration body and a notice thereof must be published in accordance with the provisions of the first and the second sentence of the first paragraph of Article 586 hereof. Such notification must contain the data from Article 21 of the Regulation 2157/2001/EC.

(2) The notification under the previous paragraph must draw the attention of shareholders to their rights under the Article 449 hereof, and the attention of creditors and to their rights under the third paragraph of this article and Article 451 hereof.

(3) Each creditor and shareholder of the company whose assets, rights and obligations are transferred through merger to SE with registered office in another Member State shall be given a copy of the documents referred to under the second paragraph of Article 586 hereof free of charge on request by the following working day at the latest.

Article 448

Simplified merger into SE

If there is only one person holding all the shares of the company or if all shareholders waive their rights to monetary compensation in the form of a notarised statement, the provisions of this act concerning the offer of monetary compensation need not be complied with in the merger contract and the review of appropriateness of the amount of monetary compensation. The shareholders may also give the waiver statement orally at the session of the general meeting which decides on consent to the merger. In this case the statement shall be entered in the minutes of the general meeting.

Article 449

The right of the shareholders to request the acquisition of shares against the payment of monetary compensation

(1) Each shareholder of the company, who at the general meeting of the company deciding on the consent to the merger makes an objection for the record against the resolution giving consent to the merger may require from the company or another person obliged to pay monetary compensation under the merger contract to acquire its shares against payment of appropriate monetary compensation. This right shall also be enjoyed by a shareholder who did not attend the general meeting if he was unlawfully prevented from attending the general meeting or if the general meeting was not correctly convened or if the subject put to a decision at the general meeting was not correctly published. The provisions of Articles 440 and 441 of this Act shall apply mutatis mutandis to the right of shareholders to request the acquisition of shares against the payment of monetary compensation.

Article 450

Exclusion of reasons to contest Court test of monetary compensation

(1) The resolution of the general meeting to decide on the consent to merger cannot be contested for the reasons under Article 604 hereof if the general meetings of all companies with registered offices in other Member States participating in the merger, in which the legislation does not regulate the procedure of court test of exchange ratio, expressly agree in the adoption of the resolution on the consent to merger that:

1. the shareholders of a company with registered office in the Republic of Slovenia may propose a court test of the exchange ratio against SE with the registered office in the Republic of Slovenia; or

2. the shareholders of the acquired company with the registered office in the Republic of Slovenia may propose a court test of the exchange ratio against SE with the registered office in another Member State in accordance with the method and under conditions state in Articles 605 to 615 hereof.

(2) In the case referred to in Point 2 of the previous paragraph the proposal for a court test can only be submitted by those shareholders participating in the general meeting to decide on the consent to merger who announced, for the record, the submission of proposal for a court test or who announced the submission of such proposal to the company within one month after the adoption of the resolution on the consent to merger.The certificate referred to in the second paragraph of Article 25 of the Regulation 2157/EC must state whether the shareholders announced the submission of the proposal for a court test of the exchange ratio.

(3) The shareholders of an individual acquired company with the registered office in another Member State may submit a proposal for a court test of the exchange ratio if:

1. it stems from the certificate issue by such company that the shareholders validly waived the right to contest the resolution adopted by the general meeting on the consent to merger for the reasons related to the exchange ratio, and

2. all acquired companies with the registered offices other Member States agree to the submission of a proposal for a court test of the exchange ratio.

Article 451

Protection of creditors and holders of special rights

The provisions of Article 442 hereof shall apply mutatis mutandis to the protection of the creditors of the company which transferred its assets, rights and obligations through merger to a SE with the registered office in another Member State.

Article 452

Application for the entry of the transfer of assets, rights and obligations of a company with registered office in the Republic of Slovenia through merger to a SE with the registered office in another Member State; issue of certificate A icl376

Annulment of shares

(1) If the reduction in the subscribed capital is carried out by means of a combining of shares, by conversion, stamping or other similar procedure, the company may annul those shares which it has not received despite calling for the shares to be submitted. The company may also annul submitted shares which do not reach the required number in order to be replaced by new shares and which are not put at the disposal of the company for it to realise them for the account of participants. A shareholder cannot be excluded from the company by merging shares; a legal community of such shareholders must be formed per share with the specific closest nominal value of share arising from reduced subscribed capital.

(2) The call for shares to be submitted must contain a warning that shares which are not submitted to the company will be annulled. The annulment shall only be carried out if the call was published in the manner set out in the first paragraph of Article 224 of this Act concerning an extended period. The annulment shall be carried out with an announcement in the company’s newsletter or electronic media. In the announcement the annulled shares shall be identified in such a way that from the announcement it is clear that the shares are annulled.

(3) The company must sell new shares which are issued in place of annulled and not exchanged shares for the account of the shareholders at the official market price with the aid of a broker, or at a public auction if there is no market price.

(4) If it can be reasonably expected that a public auction will not be successful, the shares may be sold at an appropriate location. The time, place and subject of the auction shall be published in the usual local manner. Participants shall be specifically notified unless this is not possible. The publication and the notification must be carried out at least two weeks prior to the auction. The proceeds will be paid to the participants.

Article 377

Registration

**(1) **The management must notify a reduction in the subscribed capital for entry in the register.

(2) The notification and the entry of the reduction in the subscribed capital may be combined with notification and entry of the resolution on the reduction. If the subscribed capital is reduced by the merger of shares, the registration of decreased subscribed capital can be filed and entered in the register after the completed programme of share merger in accordance with the provision of the previous paragraph hereof.

Article 378

Reduction below the minimum nominal value

The subscribed capital may be reduced below the minimum amount referred to in Article 171 of this Act if this amount is again reached by means of an increase in the subscribed capital, on which a resolution must be adopted simultaneously with the reduction in the subscribed capital, whereby such increase shall not be possible by means of non-cash contributions.

Division 2

Simplified reduction in the subscribed capital

Article 379

Terms and conditions

(1) A reduction in the subscribed capital which is intended to cover a loss brought forward or a net loss for the financial year or for the transfer of amounts to the capital reserves may be carried out in simplified form. The resolution on the reduction in the subscribed capital must state the purpose of the reduction in the subscribed capital.

(2) Simplified reduction in the subscribed capital shall be allowed if:

• there are no profit reserves or they are released beforehand apart from statutory reserves and capital reserves under points 1 to 3 of the first paragraph of Article 64 the sum of which equals 10%, or a higher percentage of the subscribed capital determined in the articles of association after the reduction in the remaining subscribed capital, and

• net profit for the year and net profit brought forward no longer exists.

(3) The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to a reduction in the capital stock in accordance with the preceding paragraphs.

Article 380

Restrictions on the use of profit by simplified reduction in the subscribed capital A simplified reduction in the subscribed capital may not be used to distribute the profit for appropriation to shareholders or use it for other purposes set out in the articles of association until the total amount of capital reserves under points 1 to 3 of the first paragraph of Article 64 of this Act and the statutory reserves reach the share of the subscribed capital referred to in the third paragraph of Article 64 of this Act after its reduction. Until that time the restriction on the proportion of the net profit which may be transferred annually to the statutory reserves under the fourth paragraph of Article 64 of this Act shall not apply.

Division 3

Reduction in the subscribed capital by means of a withdrawal of shares

Article 381

Terms and conditions

(1) A company may withdraw shares compulsorily or through acquisition by the company. A compulsory withdrawal shall be permitted only if it was provided for or permitted in the original articles of association or through an amendment to the articles of association before the shares were acquired or subscribed to.

(2) The provisions on an ordinary reduction in the subscribed capital shall apply to a compulsory withdrawal. The articles of association or a general meeting resolution shall determine the conditions for a compulsory withdrawal and set out the details of how it is carried out. The provisions laid down in the second paragraph of Article 375 of this Act shall apply mutatis mutandis to the payment made to shareholders in the event of a compulsory withdrawal or acquisition of shares for withdrawal.

(3) The provisions on an ordinary reduction in the subscribed capital shall not apply if shares for which the issue value has been fully paid up:

– were placed at the company’s disposal without charge, or

– were withdrawn against the value of the profit for accumulation or the reserves under the articles of association or other profit reserves if their use for such purposes is permitted.

(4) Any decision to reduce the subscribed capital by means of a withdrawal of shares in cases under the preceding paragraph shall be taken by the general meeting. In order for such resolution to be valid it shall require a simple majority of the votes. The articles of association may stipulate a larger majority and lay down other requirements. The resolution shall state the purpose of reducing the capital. The management and the chairman of the supervisory board must notify the resolution for entry in the register.

(5) In cases under the third paragraph of this article an amount shall be allocated to the capital reserves which is equal to the total lowest issue value of the withdrawn shares.

(6) A resolution by the general meeting shall not be required if a compulsory withdrawal of shares is provided for in the articles of association. In the application of the provisions on an ordinary reduction in the subscribed capital a decision by the management to withdraw shares shall be sufficient instead of a resolution by the general meeting.

**Article 382 **

Commencement of validity of a reduction in the subscribed capital

The subscribed capital shall be reduced by the full lowest issue value of the withdrawn shares as of the day the resolution is entered in the register or as of the day the shares are withdrawn. In the case of a compulsory withdrawal provided for in the articles of association, and if the decision to withdraw the shares is not taken by the general meeting, the subscribed capital shall be reduced once the compulsory withdrawal has been carried out. In order for the shares to be withdrawn the company must take action to annul the rights deriving from the shares.

Article 383

Notification of a reduction

The provisions laid down in Articles 372 to 374 and 376 to 378 of this Act shall apply mutatis mutandis to the notification of a reduction in the subscribed capital for entry in the court register.

Section 7

SPECIAL PROVISIONS ON THE TREATMENT OF MINORITY SHAREHOLDERS

Subsection 1

Exclusion of minority shareholders from the company

Article 384

Transfer of shares against payment of appropriate monetary compensation

**(1) **On a proposal of a shareholder whose shareholding represents at least 90% of the company’s subscribed capital (hereinafter: the principal shareholder) shall adopt a resolution on the transfer of shares of shares of the remaining shareholders (hereinafter: minority shareholder) to the principal shareholder against payment of appropriate monetary compensation.

(2) The provisions laid down in the second to fourth paragraphs of Article 528 of this Act shall also apply mutatis mutandis to the establishment of the amount of shares belonging to the principal shareholder.

Article 385

Monetary compensation

**(1) **The principal shareholder shall set the amount of monetary compensation by applying mutatis mutandis the provisions of the fifth and the sixth sentence of the second paragraph of Article 556 hereof. The management must make available to the principal shareholder the necessary information and evidence.

(2) Prior to the convocation of the general meeting, the principal shareholder must submit to the management of the company a statement from the bank in which the bank confirms its joint and several liability to meet the obligations of the principal shareholder, namely, to pay monetary compensation to the minority shareholders for the acquired shares immediately after the registration of the transfer of shares in the appropriate register.

Article 386

Preparing and holding the general meeting

**(1) **The publication of the agenda of the general meeting to decide on the transfer of shares to the principal shareholder must contain:

• name and registered office of the company or name, surname and address of the principal shareholder; and

• the amount of monetary compensation offered by the principal shareholder.

(2) The principal shareholder shall prepare a written report for the general meeting in which it shall explain the assumptions for the transfer of shares and the appropriate amount of monetary compensation. The appropriate amount of monetary compensation offered by the principal shareholder shall be reviewed by one or more auditors appointed by the court on a proposal by the principal shareholder. The provisions of Article 583 of this Act shall apply mutatis mutandis to the review of the appropriateness of the amount of monetary compensation. In their reports, the principal shareholder and the auditors shall not be required to disclose the information referred to in the first and third indents of the second paragraph of Article 305 of this Act. An auditor’s report shall not be required if it is waived by all minority shareholders in the form of a statement. Such waiver statements must be given in the form of a notarial record.

(3) Every shareholder shall be given access to the following, prior to the general meeting, at the registered office of the company:

– proposal on the transfer of shares;

• annual reports for the last three financial years;

• a written statement of the principal shareholder from the second paragraph of this Article; and

• the auditor’s report from the second paragraph of this Article.

(4) All shareholders shall be given on request and free of charge a copy of the documents referred to in the first, third and fourth indent of the previous paragraph by the following working day at the latest.

(5) The documents referred to in the third paragraph of this article shall be submitted to the session of the general meeting. At the beginning of the discussion at the general meeting, the principal shareholder must orally explain the proposal of the resolution for the transfer of shares and the method of calculating the amount of monetary compensation. Before a decision is taken on consent to the transfer of shares to the principal shareholder, the principal shareholder must inform the minority shareholders of all significant changes in the assets of the company that occurred between the drawing up of the resolution on the transfer of shares and the session of the general meeting. Significant changes shall, in particular, be those meaning that a different monetary compensation would be appropriate.

Article 387

Entry of the resolution on the transfer of shares; legal consequences

(1) The management must submit an application for the entry of the resolution on the transfer of shares in the register. A notarised copy of the minutes of the general meeting which decided on the exclusion of minority shareholders and the relevant enclosures shall be attached to the proposal.

(2) For the proposal of the entry of the resolution on the transfer of shares to the principal shareholder, its enclosures and the process of deciding on the proposal, the provisions of Point 1 of the second paragraph and third to fifth paragraph of Article 590 hereof shall apply mutatis mutandis.

(3) With the entry of the resolution on the transfer of shares in the register, all shares held by minority shareholders shall be transferred to the principal shareholder. The shares in book-entry form shall be deposited by the clearing and depository house on a special account so that the minority shareholders shall not be able to dispose of them; if the company issued share certificates, these shall only be used as evidence for exercising the right to monetary compensation until they are delivered to the principal shareholder.

(4) A minority shareholder can keep the legal interest if they filed a lawsuit for which legal interest is requested and which stems from the holdership of the company’s shares until the date of the general meeting to decide on the transfer of shares to the principal shareholder.