PART TWO
TYPES OF MERCHANTS

DIVISION ONE
SOLE PROPRIETOR

CHAPTER EIGHT
NATURAL PERSON MERCHANT

Definition
Article 56

Any natural person possessing capacity whose domicile is in the country may register as a sole proprietor.

Restrictions
Article 57

Ineligible to be a sole proprietor shall be a person:
1. who is bankrupt and his rights have not been restored;
2. who has intentionally gone bankrupt and has left unsatisfied creditors.
3. who has been convicted for bankruptcy.

Registration
Article 58

(1) A sole proprietor shall be registered on the basis of an application which shall state:
1. the name, domicile, address and Unified Civil Code (EGN);
2. the trade name under which the activities shall be carried on;
3. the seat and the address of the registered office;
4. the purposes of the business.
A specimen of the merchant's signature and an affidavit stating that the person has not been deprived of the right to carry on commercial activities shall be attached to the application.
(3) (Amended SG 124/1997) The data pursuant to para (1) shall be registered.
(4) (Former Paragraph 2 SG 124/1997)A person may register only one trade name as a sole proprietor.

Trade Name of Sole Proprietor
Article 59

A sole proprietor's trade name shall incorporate without abbreviation the person's given name and either the surname or patronymic by which he is generally known.

Transfer of Trade Name
Article 60

(1) A sole proprietor's trade name may be transferred to a third party only together with his enterprise. The consent to transfer a trade name shall be given in accordance with Article 15, paragraph 1.
(2) A sole proprietor's heirs, on acquiring the enterprise, shall be free to retain its trade name.
(3) In cases under the preceding paragraphs the new owner's name shall be added to the trade name.
(4) The transfer shall be registered in the commercial register and shall be published in the State Gazette.

Deletion from the Commercial Register
Article 60a
(New, SG - 84-2000)

The entry of the sole proprietor from the commercial register shall be deleted:
1. in case of termination of his activity or establishment of a residence abroad - upon his written request to the court;
2. in case of his death - upon written request by his successors;
3. in case of his judicial disability - upon written request by the guardian or trustee.

DIVISION TWO
STATE-OWNED AND MUNICIPAL ENTERPRISES

CHAPTER NINE
PUBLIC ENTERPRISE MERCHANT

Status
Article 61

A state-owned and municipal enterprise shall be either a single person limited liability company or a single person joint stock company. State-owned and municipal enterprises may also form other companies or groups of companies.

Formation
Article 62

(1) State-owned enterprises shall be formed as or transformed into single person limited liability companies or single person joint stock companies pursuant to a procedure to be established by a law.
(2) Municipal enterprises shall be formed as or transformed into single person limited liability companies or single person joint stock companies through a resolution of the municipal council.
(3) State-owned enterprises which are not companies may be formed with a law.

DIVISION THREE
COMPANIES

CHAPTER TEN
GENERAL PROVISIONS

Definition
Article 63

(1) A company is an association of two or more persons for effecting commercial transactions with joint means.
(2) In cases provided by a law a company may be incorporated by one person.
(3) Companies shall be legal persons.

Types of Companies
Article 64

(1) The types of companies are:
1. general partnership;
2. limited partnership;
3. limited liability company;
4. joint stock company;
5. partnership limited by shares.
(2) Only the companies set forth in this Law may be established.
(3) Banking and insurance activities may be carried out only by joint stock companies or cooperatives.

Partners in a Company
Article 65

(1) A company's founders shall be Bulgarian or foreign natural or legal persons possessing capacity.
(2) A person may participate in one or more companies to the extent such participation is not prohibited by law.
(3) (New - SG - 84-2000) If a company participates in another, its rights of a partner or sole owner shall be executed by the person having the right to represent it or by explicitly authorized person.

Preliminary Agreement to Form a Company
Article 66

Persons wishing to form a company may reach agreement on the acts which must be performed so that the incorporation may be prepared. For a breach of obligations based on that agreement the parties shall be liable only for the actual damages caused.

Formation of a Company
Article 67

A company shall be deemed formed on the date of its registration in the commercial register. The application for registration shall be filed by the appointed managing organ.

Interpretation of the By-Laws
Article 68

The will of the parties and the objective of the interpreted provision shall be taken into account when interpreting the by-laws.

Liability for Acts Performed by the Company Prior to Registration
Article 69

(1) Any acts by the founders performed in the name of the as yet unincorporated company prior to the date of its registration shall create rights and obligations for the persons who have carried out the said acts. When transactions are effected it shall mandatorily be noted that incorporation is pending. The persons who have effected the transactions shall be liable jointly and severally for undertaken obligations.
(2) When the transaction has been effected by the founders or a person authorized by them, the rights and obligations shall be transferred ex lege to the incorporated company.

Voidability of Incorporated Company
Article 70

(1) (Amended- SG - 84-2000) The incorporation of a company shall void only if one of the following offences has been admitted:
1. if has not been concluded Articles of Partnership or it has not been concluded in the required form by the law;
2. if the requirement of Art. 159 and 163 have not been fulfilled for the joint stock company and the partnership limited by shares;
3. if the company has been registered not by the court of its seat;
4. if the purposes of the business of the company contradict the Law or the Good manners;
5. if the Articles of Partnership or the By-laws do not regulate the trade name, the purposes of the business of the company or the size of the contributions, as well as the registered capital of the company when the Law requires it;
6. if the stipulated by the Law part of the registered capital has not been installed;
7. if in the founding of the company have participated legally able persons lees than the number required by the law.
(2) (Amended, SG- -84-2000) Any interested party, as well as the public prosecutor, may request the district court of the registration of the company, the company be declared void.In the cases under par. 1, item 3-6, the court shall declare the company void, if the offence has not been already eliminated or it has not been eliminated within suitable term defined by the court.
(3) The court's ruling to declare the company void shall be effective from the date of entry into force. As of that moment the company shall be deemed terminated and that fact shall be registered on the court's own motion in the commercial register, after which liquidation shall be carried out by a court-appointed liquidator.
(4) Where acts in the name of the company declared void have been carried out, the founders shall be liable jointly and severally and their liability shall be unlimited.
(5) (New, SG-84-2000) Article 498 of the Civil Procedure Code shall not apply concerning the company formation.

Protection of Partnership
Article 71

Any partner in a company may bring an action to the district court of the company's seat to protect its right to be a partner and its individual rights as a partner, when these have been violated by the company's organs.

Non-Monetary Contributions
Article 72

(1) Should a partner or, respectively, a shareholder, make a non-monetary contribution, the articles or, respectively the by-laws, shall state the name of the contributor, a full description of the non-monetary contribution, its monetary value, and the grounds for the contributor's rights.
(2) (Supplemented -SG 103-1993, Amended, SG-84-2000) The contribution in a limited liability company, a joint stock company or a partnership limited by shares shall be valued by three experts appointed by the court which shall register the company, at the request of the contributor. The valuation shall comprise the full description of the non-monetary contributions, the evaluation method, the obtained assessment and its compliance with the size of the partners' interest in the capital or with the number, nominal value or emissions value of the shares, registered by the contributor. The valuation shall be presented for entry in the register, after it has been accepted by the court.
(3) (New, SG-84-2000) The valuation stated in the articles of the company or, respectively, the by-laws, shall not be higher than the valuation assigned by the experts before the court.
(4) (Previous Par. 3, SG-84-2000) If the contributor do not agree with the valuation, he may participate in the company with monetary contribution or may withdraw from participation in the company.
(5) (Previous Par. 4, SG-84-2000) The contribution shall not have as a subject future labor or services.

Paying Up of Non-Monetary Contributions
Article 73

(1) The contribution of a right for the creation or transfer of which a notarial form is required shall be effected with the articles. For contributions to a joint stock company the consent in writing of the contributor and a description of the contribution with a notarized signature shall be attached to the by-laws.
(2) The contribution of any other rights shall be made pursuant to the form the law provides for their creation or transfer.
(3) (Suplemented, SG-84-2000) The contribution of a claim shall be made with the articles or, respectively, the by-laws, and the contributor shall attach evidence of having notified the debtor for the transfer of the claim. The requirement for notification shall not apply if the claim regards the company itself;
(4) Title to a contribution shall be acquired from the moment of the company's formation.
(5) (Amended SG 104/1996) Where a contribution has as a subject a real right over real property, the respective organ of the company shall, after such right has arisen, present an abstract of the articles, certified by a recordation judge, for recording in the recordation office and, whenever necessary, separately the contributor's consent as well. Such organ shall present an abstract of the by-laws certified by a recordation judge and the contributor's consent. In making the recording the recordation judge shall ascertain the contributor's rights.

Abolishment for remission and deduction
Article 73a (New, SG- 84-2000)

The obligation of the partners in a limited liability company and of the shareholders in a joint stock company for installments in the registered capital, can not be remitted, except in case of its reduction, neither it can be deducted.

Article 73b (New, SG- 84-2000)
Hidden non-monetary installment

(1) A decision of the general meeting of the shareholders shall be required in case a joint stock company within two years from its founding, acquires rights at a price exceeding with 10 % of its capital from a person who has registered stocks at the founding of the company and Art. 72, par. 2 shall apply for the transferred rights.
(2) The transaction shall enter into force from the entry of the decision of the general meeting in the commercial register. The decision shall be published in State Gazette.
(3) Paragraphs 1 and 2 shall not apply for rights acquired during the usual activity of the company, at the stock exchange or under supervision of the court or state body.

Repeal of a Resolution of the Company's General Meeting
Article 74

(1) Every partner or shareholder may bring an action before the district court of the company's seat for the repeal of a resolution of the general meeting when such resolution is inconsistent with a mandatory provision of the law or with the articles or, respectively, the by-laws of the company. The action shall be brought against the company.
(2) The action shall be brought within 14 days of the date of the meeting when the plaintiff was present or was duly notified, or otherwise within 14 days of learning of the resolution, but not later than three months after the date of the general meeting.
(3) A partner or shareholder may intervene in a proceeding in accordance with the provisions of the Code of Civil Procedure. It may carry on the proceedings even after the withdrawal of the original plaintiff.

Subsequent Voiding of Annulled Resolution
Article 75

(1) The instructions given by the court in repealing a general meeting resolution concerning the interpretation of the law, the memorandum of association or the by-laws shall be binding on the general meeting whenever it discusses the same issue again.
(2) Resolutions or acts by the company's organs which are in contravention of an effective court ruling are null and void. Each partner or shareholder may at any moment refer to such nullity or request its proclamation by the court.

CHAPTER ELEVEN
GENERAL PARTNERSHIP

Section I
General Provisions

Definition
Article 76

A general partnership shall be a company formed by two or more persons for the purpose of effecting commercial transactions by occupation under a joint trade name. The partners shall be liable jointly and severally and their liability shall be unlimited.

Trade Name
Article 77

The trade name of a partnership shall consist of the surnames or trade names of one or more of the partners with the extension "sabiratelno druzhestvo" [general partnership] or "sadruzhie" ("s-ie") [partners].

Content of Articles of Partnership
Article 78

A partnership's articles shall be drawn up in writing with notarized signatures of the partners and shall state:
1. the name and domicile or, respectively, the trade names and seat, as well as the address of each partner;
2. (Amended SG 124/1997) the trade name, the seat, the registered office and the purposes of the partnership;
3. the type and amount of each partner's contribution and the valuation thereof;
4. the manner of distribution of profits and losses among the partners;
5. the manner of management and representation of the partnership.

Registration of the General Partnership
Article 79

(1) The application for registration of the general partnership in the commercial register shall be signed by all partners and the articles of partnership shall be attached to it.
(2) Registered in the register shall be the information under items 1, 2 and 5 of the preceding article.
(3) The persons authorized by the articles of partnership to represent the partnership shall submit specimen signatures.

Section II
Partners' Relationships

Primacy of the Articles
Article 80

The partners' legal relationships shall be governed by this Section, unless the articles of partnership provide otherwise, with the exception of the provision of Article 87.

Compensation for Expenses and Damages
Article 81

(1) A partner shall be entitled to reimbursement for necessary expenses incurred in the course of the partnership's business and to compensation for damages suffered in connection with such business.
(2) The partnership shall pay the interest as set by law on such expenses incurred or damages suffered by a partner.

Obligation to Pay Interest
Article 82

A partner which is in arrears in paying its monetary contributions or receives or, respectively, takes partnership money for itself without being entitled to do so, shall owe the partnership the repayment of all such moneys and the interest as set by law. Should the damages for the partnership be greater, the partnership may seek compensation for the balance.

Prohibition on Competition
Article 83

(1) A partner may participate in another company or enter into transactions related to the purposes for which the partnership was set up, on its own account or on account of a third party, only with the consent of the other partners.
(2) In case of a violation of paragraph 1 the partnership may request compensation for the damages suffered or state that it shall assume the rights and obligations under the concluded transactions. The statement must be made in writing within one month of acquiring knowledge of the transaction, but not later than one year of its conclusion, and be forwarded to the partner and the third party.
(3) The right to an action pursuant to the preceding paragraph shall expire after three months from the date of the partners' becoming aware of the said act, or after three years of the commitment of the said acts when the partners have no knowledge of them.

Management
Article 84

(1) Each partner shall be entitled to take part in the management of the partnership's business, except when management has been assigned with the articles of partnership to one or several of the partners or to a third party.
(2) The consent of all partners shall be required for the acquisition or disposal of real rights over real property, for the appointment of a manager who is not a partner, or for executing an agreement for a cash loan exceeding a sum fixed in the articles of partnership.

Revocation of Management Assignment
Article 85

The resolution to assign the management to one or several partners may be revoked by the district court of the partnership's seat upon an action brought by some of the partners, if the managers have committed a breach of their obligations, as well as on other grounds provided for in the articles of partnership. The ruling shall be registered upon the court's own motion.

Partner's Right to Exercise Control
Article 86

A partner which does not participate directly in the management shall be entitled to obtain information on the partnership's business, to inspect the books, the partnership and other papers, and to ask for explanations from the managers.

Resolutions
Article 87

Where the articles of partnership require that resolutions be adopted with a majority vote, each partner shall be entitled to one vote. Resolutions shall be recorded in the minutes book.

Section III
Partners' Relationship With Third Parties

Liability of the General Partnership
Article 88

When bringing an action against the partnership the plaintiff may also name as defendants one or several of the partners. Forcible execution shall be directed first against the partnership, and, in case of impossibility for satisfaction, against the partners.

Representation
Article 89

(1) Each partner shall represent the partnership, unless the articles of partnership provide otherwise.
(2) A limitation upon the representative powers of a partner shall not be binding upon bona fide third parties if it is not registered in the commercial register.

Revocation of Representative Powers
Article 90

The representative powers of a partner may be revoked pursuant to Article 85.

Partners' Plea
Article 91

A partner may, in addition to the partnership's pleas, make its personal pleas before the partnership's creditors.

Liability of Newly Admitted Partners
Article 92

The liability for all of the partnership's debts of a newly admitted partner in an existing partnership shall equal that of the other partners.

Section IV
Dissolution of a Partnership and Termination of a Partners' Participation

Grounds for Dissolution
Article 93

A general partnership shall be dissolved upon:
1. expiration of its term or under other circumstances provided in the articles of partnership;
2. the agreement of the partners;
3. declaring the partnership bankrupt;
4. where there is no other provision, death or the placing under judicial disability of a partner or dissolution of a partner which is a legal person;
5. request of the trustee in bankruptcy in case of bankruptcy of a partner;
6. notice of termination from a partner;
7. a court ruling in the cases established by law.

Dissolution upon Notice from a Partner
Article 94

Where a partnership has been formed for an indefinite period of time each partner may request its dissolution by sending at least six months prior notice in writing to all remaining partners, unless the articles of partnership provide otherwise.

Dissolution by Court Order. Dismissal of Partner
Article 95

(1) The district court may dissolve a partnership upon an action brought by a partner when another partner has deliberately or in gross negligence omitted to perform an obligation of its under the articles of partnership or the performance of the obligation has become impossible. This rule shall also apply whenever a partner acts against the interests of the partnership.
(2) Upon an action brought by a partner the court may, instead of dissolving the partnership, dismiss the partner which is at fault.

Dissolution upon Notice from a Private Creditor of a Partner
Article 96

(1) The creditor of a partner which in the course of six months cannot be satisfied by forcible execution upon the debtor's personal property may attach that partner's liquidation share and request the dissolution of the partnership upon a notice in writing pursuant to the procedure set forth in Article 94.
(2) A partnership shall not be dissolved in case the partnership or the remaining partners repay the debt following the attachment pursuant to the preceding paragraph. In this case only the participation of the debtor partner shall be terminated, unless the partners decide otherwise.

Perpetuation of Partnership
Article 97

(1) The partners may provide in the articles that the partnership shall continue to exist in the case of termination of the participation of a partner. In this case the remaining partners shall buy out the share of the partner which has terminated its participation, and in the case of a partner's death, those of its heirs who wish shall be admitted as partners. The heirs shall state their intent to be admitted as partners not later than three months from the date of the opening of the succession.
(2) In case the heirs do not wish to be admitted as partners, as well as in case of termination of the participation of a partner, the partnership shall pay the value of the share in the partnership's assets of the decedent or the partner which has terminated its membership, and their share in the annual profits for the period up to the death or termination of the participation.

Limitation
Article 98

(1) The right of action against a partner for obligations of the partnership shall expire by limitation after five years, except where the right of action against the partnership is subject to a shorter limitation.
(2) The limitation period shall run from the date on which the dissolution of the partnership or the termination of the participation of the partner is registered in the commercial register.
(3) An interruption of the limitation with respect to the dissolved partnership shall also apply to those partners which were partners at the time of the dissolution.

CHAPTER TWELVE
LIMITED PARTNERSHIP

Section I
General Provisions

Definition
Article 99

(1) A limited partnership shall be formed with articles of partnership between two or more persons for carrying out commercial activities under a common trade name, whereby for the partnership's obligations one or more of the partners shall be liable jointly and severally and their liability shall be unlimited, and the remaining partners' liability shall not exceed the amount of the agreed upon contribution.
(2) (Repealed, Former Paragraph 3 SG 103/1993) The provisions for the general partnership shall apply mutatis mutandis to the limited partnership, to the extent this chapter does not provide otherwise.

Form
Article 100

The articles of partnership shall be drawn up in writing with notarized signatures of the partners.

Trade Name
Article 101

(1) The company's trade name shall contain the extension "komanditno druzhestvo" [limited partnership] or the abbreviation "KD" and the name of at least one of the general partners.
(2) The names of limited partners shall not be incorporated in the trade name of a limited partnership, but in case this has occurred those partners shall be deemed to bear unlimited liability vis-à-vis the creditors of the partnership.

Content of the Articles of Partnership
Article 102

A limited partnership's articles shall state:
1. the trade name of the partnership;
2. the seat and the registered office;
3. the purposes for which the partnership is set up;
4. the names or, respectively, the trade names and the addresses of the partners and the extent of their liability;
5. (Repealed - SG - 84-2000)
6. the type and amount of the partners' contributions;
7. the manner of distribution of profits and losses among the partners;
8. the manner of management and representation of the partnership.

Registration
Article 103

A limited partnership shall be registered with the commercial register of its seat by the general partners, which shall file the articles of partnership and specimen signatures.

Section II
Partners' Legal Relationships

Primacy of the Articles of Partnership
Article 104

The partners' legal relationships, to the extent the articles of partnership contain no provision to the contrary, shall be governed by this Section.

Management
Article 105

A limited partnership shall be managed and represented by the general partners. A limited partner has no right to manage the partnership and block resolutions of the general partners.

Acts by a Limited Partner
Article 106

Should a limited partner effect transactions in the name and on behalf of the partnership without being the partnership's manager or agent it shall be personally liable, except when the partnership ratifies the transaction.

Prohibition Concerning an General Partner
Article 107

The rule of Article 83 shall apply to a general partner.

Limited Partner's Rights
Article 108

A limited partner may inspect the partnership's books and request a transcript of its annual financial statement. In case of refusal the district court shall, on the motion of such partner, order that these be placed at the disposal of the partner.

Limited Partner's Participation in Profits and Losses
Article 109

(1) Where a limited partner has not paid in full the stipulated contribution, such contribution shall be deducted from its share of the profits.
(2) A limited partner shall participate in losses up to the amount of the stipulated contribution. It shall not be bound to pay back any profits it has received to offset subsequent losses.

Prohibition on Distribution of Profits
Article 110

Where at the end of a calendar year it is established that a partnership has shown losses which affect the contributions made, no profits shall be distributed before the contributions have been restored to their stipulated amounts.

Section III
Partners' Legal Relationships With Third Parties

Liability of Limited Partner
Article 111

A limited partner shall be liable towards the partnership's creditors to the extent of its stipulated contribution, even when it has not been paid in full.

Liability Prior to Registration
Article 112

A limited partner shall bear unlimited liability with respect to transactions entered into by it in the name of the partnership prior to its formation, or after such formation whenever the creditor did not know that it was contracting with a limited partner.

CHAPTER THIRTEEN
LIMITED LIABILITY COMPANY

Section I
General Provisions

Definition
Article 113

A limited liability company may be formed by one or more persons which shall be liable for the company's obligations with their contributions to the company's registered capital.

Form of Articles of Incorporation
Article 114

(1) The articles of incorporation shall be executed in writing.
(2) A partner may be represented by an agent holding a special power of attorney with notarized signature.
(3) When the limited liability company is formed by one person, a constitutive deed shall be drawn up instead of articles of incorporation.

Content of Articles of Incorporation
Article 115

The articles of incorporation shall state:
1. (Amended SG 124/1997) the trade name, the seat and the registered office of the company;
2. the purposes and the time period for which the company is being set up;
3. the names or, respectively, the trade names of the partners;
4. (Supplemented SG 84-2000) the registered capital. Where the full amount has not been paid at incorporation, the articles shall set the time periods and terms for payment. The term for the installment of the full size of the registered capital shall not be longer than 2two years from the founding of the company, respectively from its increase.
5. the interests of the partners;
6. the management and manner of representation;
7. the privileges of the partners, where agreed upon;
8. other rights and obligations of the partners.

Trade Name
Article 116

(1) The trade name of a company shall contain the extension "druzhestvo s ogranichena otgovornost" [limited liability company] or the abbreviation "OOD".
(2) Should all the capital be owned by one person, the trade name shall contain the extension "ednolichno OOD" [single person limited liability company]

Capital and Shares
Article 117

(1) (Amended, SG No. 100/1997) The registered capital of a limited liability company shall be not less than BGN 5,000. It shall consist of the interests of the company's partners, and no interest shall be smaller than BGN 10.
(2) The sum total of all interests shall be equal to the registered capital, and the value of each interest shall be a multiple of 100.
(3) The interests of the individual partners may be of unequal value.
(4) An interest may be held jointly by several persons.

Liability of Founders
Article 118

(1) The founders shall be liable jointly and severally before the company for damages caused in the course of its formation, if they have not acted with due care.
(2) The founders shall not be entitled to remuneration for the formation of the company from the registered capital.

Company Registration
Article 119

(1) For registration of a company in the commercial register it shall be necessary:
1. to file the articles of incorporation;
2. to have an appointed manager or managers;
3. (Amended SG - 84-2000) each partner to have paid at least one third of its interest, but not less than BGN 10;
4. at least 70 per cent of the registered capital to have been paid.
(2) The data under items 1, 2, 3, 4 (only the amount of the registered capital) and 6 of Article 115 shall be registered in the register and published.
(3) ( New - SG 114/1999) In order, acting as a investment intermediary, to enter in the commercial register, as well as other activities for which the Law provides an accomplishment with a permission from a state body, the said permission shall be presented.
(4) ( New - SG 84/2000) In case of amendment and supplement of the company contract, the representing body of the company shall certify a copy of the company contract with all the amendments and supplements and shall present it at the commercial register.

Section II
Partners' Rights and Obligations

Shares
Article 120

(1) Each partner shall pay up or contribute its interest as provided in the articles of incorporation.
(2)(Repealed SG 84-2000).

Consequences of Failure to Pay Up or Contribute One's Share
Article 121

(1) The failure to pay up or contribute an interest shall constitute grounds for the expulsion of a partner from the company. A partner which has failed to pay up or contribute its interest within a specified period shall owe interest at a rate determined by operation of law, and compensation for damages in excess of such interest.
(2) Where the interest cannot be paid up or contributed by the partner owing such payment or contribution, and cannot be sold to a third party, the remaining partners must pay up the balance in proportion to their interests or reduce the company's registered capital in accordance with established procedures.

Admitting a New Partner
Article 122

A new partner shall be admitted by the general meeting upon an application in writing, in which it shall state that it accepts the terms of the articles of incorporation. The resolution to admit the partner shall be registered in the commercial register.

Partners' Rights
Article 123

Each partner shall be entitled to take part in the management of the company, in the distribution of profits, to be informed of the company's affairs, to review the company's books and to liquidation proceeds.

Partners' Obligations
Article 124

The partners must pay up or contribute their interests, take part in the management of the company, provide assistance for the carrying out of its activities, as well as carry out the resolutions of the general meeting.

Termination of Participation in a Company
Article 125

(1) The participation of a partner shall be terminated upon:
1. death or disability;
2. expulsion;
3. dissolution and liquidation, in the case of a legal person;
4. bankruptcy.
(2) A partner may terminate its participation in a company with a notice in writing made at least 3 months prior to the termination.
(3) Accounts shall be settled on the basis of the balance sheet for the last day of the month of termination of the participation.

Expulsion of a Partner
Article 126

(1) The general meeting may expel a partner which has not paid up or contributed its interest. It may provide an additional period for meeting the obligation upon the expiration of which the partner shall be deemed expelled. The manager shall inform the partner in writing of the general meeting resolution.
(2) In the case of paragraph 1 the partner shall lose its title to any contributions made.
(3) A partner may be expelled by the general meeting following a notice in writing where it:
1. fails to perform its obligations for providing assistance for the carrying out of the activities of the company;
2. fails to abide by resolutions of the general meeting;
3. acts against the interests of the company.
4. (New, SG 84-2000) in the cases under Art 121.

Company Share
Article 127

Each partner shall have a company interest in the company's assets the amount of which shall be determined in proportion to its interest in the registered capital, unless otherwise agreed.

Certificate of Participation
Article 128

The certificates issued to the partners for evidencing their participation in the company shall not be negotiable securities.

Transfer of Shares
Article 129

(1) An interest in a limited liability company may be transferred and inherited. The transfer of an interest from one partner to another shall be unrestricted, and the transfer to third parties shall be subject to the provisions for admitting new partners.
(2) An interest in a limited liability company shall be transferred with notarized signatures and shall be registered in the commercial register.

Liability upon Transfer
Article 130

The transferee shall be liable jointly and severally with the transferor for any payments to the registered capital due at the date of transfer.

Partition of a Share
Article 131

The partition of an interest shall be admissible only with the consent of the partners, unless otherwise agreed.

Joint Ownership of an Interest
Article 132

Where one interest belongs to several persons they may exercise their rights over it only jointly. They shall be liable jointly and severally for any obligations arising from such interest. The joint owners of the interest shall designate a person to represent them before the company.

Profits and Payments
Article 133

(1) The partners cannot claim their interests as long as the company exists. They are only entitled to part of the profits in proportion to their interests, unless otherwise agreed.
(2) No interest on the partner's profits may be agreed upon.

Additional Monetary Contributions
Article 134

(1) For covering losses and in case of temporary shortage of cash the partners may be required, by a general meeting resolution, to make additional monetary contributions within a fixed period. The additional contributions shall be in proportion to the respective interests in the capital, unless otherwise determined.
(2) The partners shall bear the same liability for failure to pay up the additional contributions as for failure to pay up their interests.
(3) The additional contributions shall not affect the company's registered capital. It may be agreed that the company shall pay interest on them.

Section III
Management

Types of Organs
Article 135

(1) The company's organs shall be:
1. the general meeting;
2. the manager (managers).
(2) The manager does not necessarily have to be a partner.

General Meeting of Partners
Article 136

(1) The general meeting of partners shall consist of the partners.
(2) The company's manager shall take part in the general meeting's sittings in a consultative capacity.
(3) Where the number of employees exceeds 50, they shall be represented in the general meeting in a consultative capacity.

Powers of the General Meeting
Article 137

(1) The general meeting shall:
1. amend the articles of incorporation;
2. (Amended SG 103-1993) admit and expel partners, give consent on the transfer of an interest to a new partner;
3. approve the annual report and balance sheet, distribute the profits and resolve on their payment;
4. resolve on the increase or decrease of the registered capital;
5. appoint a manager, fix his remuneration and relieve him of liability;
6. resolve on setting up or closing down branches and participation in other companies;
7. resolve on the acquisition or alienation of real property and real rights therein;
8. resolve on bringing a company action against the manager or comptroller and appoint an attorney to proceed with the suits against them;
9. resolve on additional monetary contributions.
(2) Each partner has as many votes in the general meeting as its interest of the capital, unless the articles provide otherwise.
(3) (Amended SG 103-1993, SG 84-2000) Resolutions under items 1, 2 and 9 of paragraph 1 shall be adopted by a majority of more than three thirds of the capital and the decisions under item 4 - unanimously by all partners, and the articles of incorporation may provide for a larger majority. The partner whose expulsion is put to a vote shall not vote. All remaining resolutions shall be adopted with a majority of the capital, unless the articles provide otherwise.
(4) The partners may vote by proxy only when such proxy holds a special power of attorney in writing; the above rule shall not apply to partners which are legal persons or to agents by operation of law.
(5) The general meeting shall adopt resolutions on labor and social issues only after hearing the position of a representative of the company's employees.

Convening a General Meeting
Article 138

(1) A general meeting shall be convened by the manager at least once every year.
(2) The manager shall also convene a general meeting upon the request in writing of the partners whose interests amount to at least one tenth of the capital. Should the manager fail to convene a general meeting within two weeks, the partners which have requested its convening shall be entitled to do so.
(3) The manager shall convene a general meeting immediately should the losses exceed one fourth of the registered capital.

Notice of General Meeting
Article 139

(1) The general meeting shall be convened by a notice in writing received by each partner at least 7 days before the date of the meeting, unless the articles provide otherwise. The notice shall specify the business to be transacted.
(2) general meeting resolutions may be adopted in absentia when all partners have stated in writing their consent for the resolution.

Registration of Resolutions
Article 140

(1) The general meeting resolutions which are related to registrations pursuant to Article 119, paragraph 2 shall be registered in the commercial register.
(2) Paragraph 1 shall apply to the resolutions of the owner of a single person company.
(3) (New, SG 84-2000) The decision regarding amendment and supplement of the articles of incorporation, capital increase or decrease, admittance or expulsion of a partner, transformation and termination of the company, as well as appointment of a liquidator shall enter into force from their entry in the commercial register.

Management and Representation
Article 141

(1) The manager shall organize and direct the activities of the company in accordance with the law and the general meeting resolutions.
(2) (Supplemented, SG 84-2000)The company shall be represented by the manager. Where several managers have been appointed each one of them may act independently, unless the articles provide otherwise. Other restrictions to the representative power of the manager shall not have effect for third parties.
(3) (Amended, SG 84-2000) In the commercial register shall be registered the name of the manager, who shall present a notary certified consent with a specimen of the signature. The registration shall be published in the State Gazette.

Prohibition on Competition
Article 142

(1) Without the consent of the company the manager may not:
1. effect commercial transactions in his own or in a third party's name;
2. participate in partnerships and partnerships limited by shares, and in limited liability companies;
3. hold positions in managing organs of other companies.
(2) The limitations under paragraph 1 shall apply when the activities carried out are similar to those of the company.
(3) For violations of his obligations under paragraph 1 the manager, when not a partner, may be dismissed without notice and without compensation. He shall owe compensation for damages caused to the company.

Company Books
Article 143

(1) The company shall keep a book of interests and minutes book on the general meeting resolutions.
(2) The value of each partner's interest, the payments made and all relevant changes thereto shall be recorded in the book of interests.
(3) The manager shall be responsible for the regular keeping of the company books.

Comptroller
Article 144

(1) The articles may provide for the appointment of a comptroller (comptrollers) who shall supervise the observance of the articles, the taking of proper care of the company's property and shall report to the general meeting.
(2) The following may not be comptrollers:
1. the managers, their deputies and company employees;
2. spouses, descendants or ascendants and collateral relatives to the third degree of the persons under the preceding item;
3. persons who with a sentence have been deprived of the right to hold a position of financial accountability.
(3) In a single person company the comptroller shall be appointed by the owner.

Liability of the Manager and the Comptroller
Article 145

The manager and the comptroller shall be financially liable for damages caused to the company.

Auditors
Article 146

(1) The company's annual financial statement shall be audited by one or several auditors who shall be certified public accountants.
(2) Such audit shall be a condition for approving the annual financial statement.
(3) The auditors shall be appointed by the general meeting before the expiration of the calendar year. They shall be liable for the proper and unbiased audit and for maintaining confidentiality.
(4) (New, SG 84-2000) The audited and approved annual financial statement shall be presented to the commercial register and statement concerning this shall be published in the State Gazette, unless the Law Stipulates that the annual financial statement of the company may not be audited by certified public accounts.

Management of a Single Person Limited Liability Company
Article 147

(1) The single owner of the capital shall manage and represent the company either personally or through an appointed by it manager. In case the owner is a legal person the manager of such legal person or a person designated by him shall manage the company.
(2) (Amended, SG 84-2000) The single owner of the capital shall resolve on the issues falling within the powers of the general meeting, and a protocol in the required form for the general meeting resolutions shall be made.
(3) (New, SG 84-2000) The contracts between the single owner and the company in case it is represented by the single owner shall be concluded in a written form.

Section IV
Amending the Articles of Incorporation

Increase of Registered Capital
Article 148

(1) The registered capital may be increased through:
1. increasing the value of the interests;
2. subscribing new interests;
3. admitting new partners.
(2) The partners may increase the value of the interests pro rata to their holdings, unless the articles of incorporation or the general meeting resolution provide otherwise.

Reduction of Registered Capital
Article 149

(1) (Amended SG 70/1998, SG 84/2000) The registered capital may be reduced to the minimal amount stipulated by the Law by a resolution to amend the articles of incorporation and as observing the requirements of Articles 150 and 151. In these cases, it shall be possible to increase or decrease the capital simultaneously under the conditions of Art. 203.
(2) The resolution shall state the purpose of the reduction, its amount and the manner through which it shall be accomplished.
(3) The reduction may be effected through:
1. reducing the value of interests;
2. cancellation of the interest of a partner which has terminated its participation;
3. relieving of the obligation to pay up the unpaid portion of the registered capital.

Notice to Creditors
Article 150

(1) The resolution to reduce the registered capital shall be published in the State Gazette. In the notice the company shall state that it is ready to provide security for claims or to pay its obligations as of the date of publication to the creditors which do not agree with the reduction.
(2) The creditor's consent for the reduction shall be assumed if within three months of the publication they do not express in writing their objection.
(3) (Repealed, SG 84-2000)

Registration of the Reduction
Article 151

(1) The amendment to the articles with which the registered capital is reduced shall be registered upon expiration of the time period specified in the previous article.
(2) Attached to the application for registration shall be proof of observance of the requirements of Article 150 and a statement in writing of the manager that either security has been provided or the debt has been repaid to the creditors which have not consented to the reduction.

Managers' Liability
Article 152

Should the data for registration of the reduction provided by the manager prove to be untrue, he shall be liable for the damages suffered by the creditors to the extent they could not be satisfied by the company. In the case of several managers they shall be liable jointly and severally.

Payments Pursuant to Reduction
Article 153

(Supplemented, SG 84-2000) Payments to the partners pursuant to a reduction of the registered capital may be made only after the reduction has been registered in the commercial register and the disagreed with the reduction creditors have received indemnification or payment.

Section V
Dissolution and Liquidation of the Company

Dissolution of the Company
Article 154

(1) The company shall be dissolved:
1. with the expiration of the term set in the articles;
2. (Amended, SG 84-2000) upon decision of the partners adopted with a 3\4 majority of the interests, unless the articles provide otherwise;
3. through a consolidation or merger with a joint stock company or another limited liability company;
4. upon being declared bankrupt;
5. by a decision of the district court in cases provided for by law.
(2) The articles may provide for other grounds for dissolution of the company.

Dissolution by a Decision of the Court
Article 155

The company may be dissolved by a decision of the district court of its registration upon:
1. an action by the partners showing serious cause. The action shall be brought against the company if the plaintiffs' interests represent more than one fifth of the registered capital;
2. (Amended, SG 84-2000) an action by the public attorney where the company's activities are in contradiction to the Law.

Liquidation of a Company
Article 156

(1) In the case of dissolution of a company pursuant to Article 154, items 1, 2 and 5 and Article 155 a liquidation procedure shall be initiated.
(2) The company's liquidator shall be its manager, except where another person has been appointed with the articles or with a resolution of the general meeting.
(3) Upon request of the comptroller or of partners holding at least one tenth of the interests the court may appoint another liquidator.
(4) The liquidation of the company shall be performed pursuant to Chapter Seventeen.

Dissolution of a Single Person Limited Liability Company
Article 157

(1) A company in which the capital is owned by a single natural person shall be dissolved upon the death of such person, except where provided otherwise or where the heirs wish to continue its activities.
(2) Where the capital is owned by a single legal person the company shall be dissolved with the dissolution of that legal person.

CHAPTER FOURTEEN
JOINT STOCK COMPANY

Section I
General Provisions

Definition
Article 158

(1) A joint stock company is a company the capital stock of which is divided into shares. The company shall be liable before its creditors with its assets.
(2) The trade name of the joint stock company shall include the extension "aktsionerno druzhestvo" [joint stock company] or the abbreviation "AD".

Number of Founders
Article 159

(1) (Amended, SG 84-2000) The founders of a joint stock company might be one or more than one natural or legal persons.
(2) In certain cases provided by law a joint stock company may be formed by one person. The constitutive deed shall approve the by-laws, specify the system of management and appoint the first supervisory board or board of directors and set their mandate.

Founders
Article 160

(1) (Amended, SG 84-2000) Founders are those persons who have registered shares at the constitutive deed of the company.
(2) Persons declared bankrupt may not be founders.

Capital and Shares
Article 161

(1) The capital stock and the value of the shares shall be designated in BGN.
(2) (Amended, SG No. 100/1997, SG 84-2000) The minimum value of the capital stock shall be 50,000 BGN.
(3) The minimum amount of the capital stock required for performing banking or insurance activities shall be determined by a separate law.
(4)(Supplemented, SG 84-2000) The capital stock must be fully subscribed.The company cannot subscribe shares from its capital stock. In case the said prohibition is violated, the founders shall be jointly liable for the installments for the registered stocks.

Nominal Value of a Share
Article 162

(Amended, SG 84-2000) The minimum nominal value of a share shall be 1 BGN . Larger nominal values of shares must be determined in integer BGN.

Section II
Incorporation
Constituent Meeting
Article 163
(Amended - SG No. 63/1995, 84/2000)

(1) The joint stock company shall be constituted on a constituent meeting where participants shall be all persons that register shares. A proxy having written explicit letter of attorney with a notary certified signature might represent a founder at the constituent meeting.
(2) Shares shall be registered at the constituent meeting.
(3) The constituent meeting shall:
1. adopt a resolution on incorporating the company;
2. adopt the by-laws;
3. establish the size of the of the expenses on constitution;
4. appoint a supervisory board or, respectively, a board of directors.
(4) The resolutions on items 1-3 of the preceding paragraph shall be adopted unanimously and a protocol shall be issued for which Art. 232 shall apply.
(5)In case a joint stock company is founded by one person, shall be issued a constituent act.

Content of the Prospectus
Article 164
(Repealed - SG No. 63/1995)

Content of the By-laws
Article 165
(Amended - SG 84/2000)

The by-laws shall contain:
1. the trade name, the seat and the registered office of the company;
2. the purposes and the term, if any;
3. the amount of the capital stock, the type and number of shares and the nominal value of each share;
4. the company's bodies and their mandate and number of members;
5. the type and value of the non-monetary contributions, if any, the persons making them, the number and nominal value of the shares which they shall receive;
6. the advantages, if any, which the said founders, by name, have reserved for themselves; if suc are stipulated;
7. the founders' right to appoint the first supervisory board or board of directors of the company and to determine its mandate, if such a mandate is foreseen,;
8. the way of the profit distribution;
9. the way of convening the general meeting;
10. other terms with respect to the incorporation, existence and dissolution of the company.

Installments
Article 166

(1) (Amended - SG 84/2000) Monetary installments shall be made to a bank account of the company opened by the managing board, respectively the board of directors, with an indication of the name of the payer, and any payments with deposited sums shall be effected with unanimous decision of the said body.
(2) The provisions of Articles 72 and 73 shall apply mutatis mutandis to non-monetary contributions.
(3) (New, SG 84-2000) If within 3 months term managing board, respectively the board of directors, does not certify to the bank that the company has been claimed for registration, the payers can draw back the full size of the installments.

Interim Certificate
Article 167

(1) (Amended - SG 84/2000) The shareholders receive interim certificates signed by an authorized member of the managing board, respectively the board of directors, for their installments to subscribe shares.
(2) The shareholders shall receive their shares upon presentation of interim certificates.

Constituent Meeting
Article 168
(Repealed, SG 84-2000)

Incorporation without Subscription
Article 169

The raising of capital may also be done at the constituent meeting, if the remaining requirements have been met. In this case at least two persons which have subscribed shares and which represent at least half of the subscribed capital must be present.

Objectives of the Constituent Meeting
Article 170
(Repealed, SG 84-2000)

Incorporation of a Company with the Subscribed Capital
Article 171
(Repealed, SG 84-2000)

Content of the By-Laws
Article 172

Founders' Liability
(Repealed, SG 84-2000)

Article 173
(Repealed, SG 84-2000)

Requirement for Registration of the Company
Article 174

(1) For the registration of a joint stock company in the commercial register it shall be necessary that:
1. the by-laws have been adopted;
2. the full amount of the capital stock has been subscribed;
3. (Amended, SG 84-2000) The stipulated by the by-laws part of the value of the share to be paid up but not less than 25 per cent of the nominal or the stipulated by the by-laws emission value;
4. the members of the board of directors or, respectively, the supervisory board have been appointed;
5. the remaining requirements of the law have been fulfilled.
(2) (Amended, SG 84-2000) The data pursuant to Article 165, items 1-4, 5/only the type and the value of the non-monetary installment shall be registered/ and 10 shall be entered in the commercial register and the entry shall be published in The date of the court decision for entry in the commercial register shall also be published. The constituent protocol and the list with the persons who have registered shares at the company's constitution shall be certified by the managing board, respectively the board of directors and shall be presented to the register.
(3) (New - SG 114/1999) In order, insurance and banking transactions, acting as a investment intermediary, investment company, stock exchange to enter in the commercial register, as well as other activities for which the Law provides an accomplishment with a permission from a state body, the said permission shall be presented.
(4) ( New - SG 84/2000) In case of amendment and supplement of the company statute, the person/s representing the joint stock company shall certify a copy of the company statute with all the amendments and supplements by the respective date and shall present it at the commercial register.

Section III
Shares

Nominal Value of the Shares. Denominations
Article 175

(1) A share shall be a security which shall attest to the fact that its owner participates in the capital stock with the nominal value indicated on it.
(2) A joint stock company may not issue shares of a different nominal value.
(3) Shares may be issued in denominations of 1, 5, 10 and multiples of 10 shares.

Issue Price
Article 176

(1) The issue price is the price at which the shares shall be purchased by the founders or, respectively, the subscribers in case the capital is raised through subscription.
(2) The issue price shall not be lower than the nominal value. Shares may also be subscribed at a price higher than the nominal value.
(3) The difference between the nominal value and the issue price shall be set aside for the company's reserve fund.

Indivisibility
Article 177

Shares are indivisible. Where a share belongs to several persons they shall exercise their rights in it jointly by designating a proxy.

Types of Shares
Article 178

(1) Shares may be registered or bearer shares. Preferred shares may also be issued.
(4) (New, SG 84-2000) The joint stock company may also issue non-cash shares. The term for issuing and transacting with the non-cash shares shall be determined by a Law.
(5) (Previous Par. 2, SG 84-2000) Bearer shares shall not be delivered until payment of their nominal value or issue price.
(4) (Previous Par. 3, SG 84-2000) Where bearer shares are delivered before payment of the full issue price the amount of the installments shall be indicated on them.

Shareholders' Register
Article 179

The joint stock company shall keep a shareholders' register in which the names and addresses of the owners of registered shares shall be recorded and the type, nominal value and issue price, quantity and serial numbers of the shares shall be indicated. The same shall be applied for interim certificates.

Exchange of Shares
Article 180

(Amended, SG 84-2000) Bearer shares shall be exchanged for registered shares and vice versa upon request of the shareholder after payment in full of their price, in case the by-laws provide the terms for it.

Shareholders' Rights
Article 181

(1) A share entitles its owner to one vote in the general meeting of shareholders, to a dividend and to a share in the assets in case of liquidation in proportion to the nominal value of the share.
(2) Where a company issues shares with special rights this must be indicated and provided for in the by-laws.
(3) (Supplemented, SG 84-2000) The shares that provide equal rights form a separate class.The restriction of rights of an individual shareholder from one class shall not be permitted.

Preferred Shares
Article 182

(1) Preferred shares may provide a guaranteed or additional dividend or share in the company's assets in case of liquidation, as well as other rights provided for in this Law or the by-laws. The by-laws may provide that preferred shares have no voting rights, which must be indicated on the respective share.
(2) Preferred shares having no voting rights shall be included in the nominal value of the capital stock.
(3) (New - SG No. 63/1995) It shall not be allowed more than 1/2 of the shares to be non-voting shares.
(4) (Former Paragraph 3 SG 63/1995) Where a dividend due from a preferred share without voting rights is not paid in the course of 1 year and the delayed payment is not made during the following year together with the dividend due for that following year, the preferred share shall acquire voting rights pending payment of the delayed dividends. In this case the preferred shares shall be taken into account in determining the quorum and majority.
(5) (Former Paragraph 4 SG 63/1995) In order to adopt a resolution with which the advantages arising from the nonvoting preferred shares are to be restricted, it shall be necessary to obtain the consent of the preferred shareholders, which shall convene at a separate meeting. The meeting may conduct business if not less than 50 per cent of the preferred shares are represented. Resolutions shall be adopted with a vote of at least three quarters of the shares so represented. The preferred shares shall acquire the right to vote upon the removal of the advantages.

Contents of a Share
Article 183

(1) A share shall contain:
1. the designation `share' for a denomination of one or `shares' for larger denominations, preceded by the respective number thereof;
2. type of the shares;
3. the number of the denomination and the serial numbers of the shares comprised therein;
4. the trade name and seat of the joint-stock company;
5. the amount of the capital stock;
6. the total number of shares, their individual nominal value and their denomination structure;
7. the coupons and their maturity;
8. the signatures of two persons having authority to bind the company, and the date of issue.
(2) (New - SG No. 63/1995) A printed signature on the share shall also be considered valid signature.
(3) (Former Paragraph 2 SG 63/1995) Filled in on the face of a registered share shall be the name of its first owner.

Coupons
Article 184

(1) Unless otherwise provided in the by-laws, shares shall be issued with dividend coupons for 20 years.
(2) Coupons may not be transferred separately from the shares.
(3) A coupon shall carry the designation `Coupon', the trade name of the joint stock company, the number of the coupon, indication as to the share and its denomination, and the year for which dividend is payable on presentation thereof.

Transfer of Shares
Article 185

(1) Bearer shares shall be transferred by delivery.
(2) Registered shares shall be transferred by endorsement which, to be binding on the company, must be recorded in the registered shareholders register. The by-laws may provide for other conditions for the transfer of registered shares.

Liability of Transferor of Registered Shares
Article 186

The transferor of registered shares which have not been fully paid up or from which other obligations towards the company arise shall be liable jointly and severally with the transferee. The transferor's liability shall lapse upon the termination of a period of two years from the date that the transfer was recorded in the shareholders register.

Transfer of Interim Certificates
Article 187

(1) An interim certificate may not be transferred prior to the incorporation of a company.
(2) Transfers of interim certificates shall be subject to the provisions of Article 185, paragraph 2.

Acquisition of Own Shares
Article 187a
(New - SG ¹ 63/1995, Amended - SG ¹ 70/ 1998 and SG ¹ 114/ 1999-Repealed; New - SG ¹ 84/2000)

(1) A company may acquire its own shares only:
1. For reduction of capital under Article 201, item 2;
2. For universal legal succession except merger or incorporation;
3. If it is free of charge;
4. If it is engaged in, by occupation in transactions with securities and acquires the shares in implementation of third party order;
5. In case of expulsion of shareholder on the terms of Art. 189, Par. 2 and 3;
6. In case of duress execution for obligations to the company;
7. In case of buy-back of shares.
(2) The shares shall be paid in full size in cases of item 2, 6, 7 and 8 of the previous paragraph;
(3) The company shall terminate the exercising the rights of the shares to the moment of their transfer;
(4) The total nominal value of the own shares on Par.1, except these on item 1 and 7, cannot exceed 10 % of the capital. The exceeding the said value shares shall be transferred within three years.
(5) If the shares acquired in the case of Par. 1, items 2-8 are not transferred in the term on Par 4, they shall be considered invalid and Art 200, item 2 shall apply.
(6) The own shares of the company shall not be taken into consideration in determining the net value of the company assets under Art. 247, Par. 2.

Buy-back of shares
Article 187b
(New - SG ¹ 63/1995, Amended -SG ¹ 114/ 1999, Repealed; New - SG ¹ 84/2000)

(1) The company may buy-back own shares on the grounds of a resolution of the general meeting that determines:
1. the maximum number of shares subject to buy-back;
2. the terms and conditions upon the board of directors or the managing board shall carry the buy-back in period not longer than 18 months;
3. the minimal and maximal price of the buy-back.
(2) The decisions under Par. 1 shall be passed with a majority of the represented capital, and if buy-back is not stipulated by the By-laws - by a majority of 2/3 of the shares represented.
(3) The buy-back shall be carried respectively, in compliance with Art. 247a, Par. 2.

Privilege for Buy-back Shares
Article 187c
(New - SG ¹ 84/2000)

(1) The by-laws may provide for the issuing of shares that shall be subject to buy-back under terms and conditions determined in the by-laws.
(2) The company shall present to commercial register the proposal for the buy-back and the announcement fir it shall be published in the State Gazette.
(3)The buy-back shall be carried out only by sums designated for distribution under Art. 247a, Par. 1, 2 and 3.
(4) The company shall be obliged to form reserves in amount of the value of all buy-back shares under Par. 1. The reserves might be distributed among the shareholders only in case of decrease of the capital with the buy-back shares and also for increase of capital.

Inadmissible Acquisition of Own Shares
Article 187d
(New - SG ¹ 84/2000)

(1) If the company has acquired own shares in violation of Art. 187a-187c, it shall be obliged to transfer the said shares within one year from the acquisition. Otherwise the shares shall be invalidated and Art. 200, item 2 shall apply.

Disclosure of information
Article 187e
(New - SG ¹ 84/2000)

The annual financial statement shall obligatory inform:
1. the number and value of the acquired during the year own stocks;
2. the legal grounds for the acquisitions during the year and the price paid;
3. the number and nominal value of the own shares.

Equalized to Own Shares Acquisition Cases
Article 187f
(New - SG ¹ 84/2000)

(1) The rules of Art. 187a -187e shall also apply when:
1. shares of the company are acquired and owned by one person for the account of the company;
2. shares of the company are acquired and owned by another company, where the first company directly or indirectly possesses majority of the voting rights or directly or indirectly can exercise control over he second company.
3. The company accepts own shares or shares under item 2 as a pawn.
(2) When the company has registered own shares at the time of its constitution or capital increase, Art. 187a, Par. 3, Art. 187d and 187e shall apply.
(3) The company shall not grant loans to third party or secure the acquisition of its own stocks by third party. The restriction shall not apply for transactions where one of the party is a commercial bank or non-banking financial institutions and the transaction is concluded at their usual activity.

Section IV
Contributions

Obligation to Make a Contribution
Article 188

(1) The shareholders shall be obligated to make contributions for the shares subscribed, which shall cover the fixed by the by-laws portion of the value of the shares.
(2) Partial contributions may vary for individual shareholders, if the by-laws provide so expressly.

Consequences of Delaying Contributions
Article 189

(1) The shareholders which have not made their contributions within the specified time periods shall owe interest, unless the by-laws do not provide for liquidated damages. In case of a delayed non-monetary contribution, compensation for actual damage suffered may be claimed.
(2) Shareholders whose contributions are overdue, if they do not make the due contributions within one month of written notice to do so, shall be deemed expelled. The notice must be published in the State Gazette unless the transfer of the shares is subject to the consent of the company.
(3) A shareholder so expelled shall lose its shares and any contributions made. The shares of a shareholder so expelled shall be canceled and destroyed. The company shall offer for sale new shares substituting the canceled ones. The contributions made by the expelled shareholder shall be appropriated to the company's reserve fund.

Interest
Article 190

(1) The shareholders shall not be paid interest on contributions made, except in cases provided for in the by-laws.
(2) (Amended SG 84 2000) Where the shareholders have made partial contributions in different proportions, interest shall be due on the difference, unless the by-laws provide otherwise. Such interest shall be paid from the profit before the payment of dividend according to Art. 247 regardless the general meeting resolution for the profit distribution.
(3) The fruits derived from contributions made prior to incorporation shall be in the company's favor, unless the by-laws provide otherwise.

Security
Article 191

The by-laws may provide that the shareholders shall provide security for the portion not contributed.

Section V
Increase of the Capital Stock

Prerequisites
Article 192

(1) The capital stock may be increased by issuing new shares, by increasing the nominal value of shares already issued, or by converting debentures into shares pursuant to Article 215.
(2) The general meeting of shareholders resolution to increase the capital stock shall be adopted by a two thirds majority of the votes of the shares represented at the meeting. The by-laws may provide for a larger majority, as well as for additional conditions.
(3) Where shares of various classes exist, the resolution shall be adopted by each class at a separate meeting.
(4) Where the new shares are to be sold at a price exceeding their nominal value, the minimum sale price shall be specified in the general meeting resolution.
(5) An increase of the capital stock is admissible only after the specified by the by-laws amount has been fully paid up.
(6) (New - SG ¹ 84/2000) In the case of increase of capital in violation of Art. 161, par. 4 the members of the managing board or board of directors, shall be jointly liable for the contributions for the registered own shares.
(7) (New - SG ¹ 56/1995, prev. par. 6 - amended, SG ¹ 84/2000) In the case of increase of capital Chapter Fourteen, Sub-section II shall apply respectively and increase of the capital stock trough subscription shall be carried out under the terms and conditions established by the Law.
(8) (New - SG ¹ 114/1999, prev. par. 7 - amended, SG ¹ 84/2000) For entering in the register the increase of the capital stock through subscription, shall be presented a prospectus except the cases when such is not required by the Law.

Requirements for the entry of the increase of the capital
Article 192a

(1) In order the capital increase to be entered in the commercial register, it shall be necessary:
1. the new shares to be registered;
2. at least 25% of nominal value of the new shares to have been paid;
3. the difference between the nominal and the issued value of the new shares to have been paid;
(2) If the new shares have not been registered in full, the capital shall be increased only with the value of the registered shares in case the decision of then general meeting for the increase permits such possibility.
(3) The list with the persons registered the new shares shall be presented to the commercial register certified by the managing board, respectively the board of directors.

Increase of the Capital Stock by Non-Monetary Contributions
Article 193

Where the capital stock is increased by non-monetary contributions, the general meeting resolution shall specify the subject of each contribution, the contributor, and the nominal value of shares given for such contribution.

Preferential Right of Shareholders
Article 194

(1) (Amended SG 84-2000) Each shareholder is entitled to acquire a part of the new shares in proportion to its share in the capital stock prior to the increase.
(2) (Amended SG 84-2000) In case of shares of different class the right under Par. 1 shall valid for the shareholders of the respective class. The rest of the shareholders shall exercise their privilege after the shareholders of the class from which are registered the new shares.
(3) (New SG 84-2000)The right under Par. 1 and 2 shall be lapsed within a term determined by the general meeting, but not lee than a month after the publishment in the State Gazette of the invitation for registration of the shares. The invitation for registration of new shares shall be entered into the commercial register after presenting the decision for the increase of the capital
(4) (New SG 84-2000) The shareholders' right under the par. 1 and 2 may be restricted or forfeited pursuant to a general meeting resolution passed with three quarters of the votes of the shares represented. The managing board, respectively the board of directors shall present a report concerning the reasons for the restriction or forfeiting of the privilege and shall motivate the issued value of the new shares. The decision of the general meeting shall be presented at the commercial register and published.

Conditional Increase of the Capital Stock
Article 195

The increase of the capital stock may be conditional upon the buying of the shares by certain persons at a certain price, or against debentures issued by the company.

Increase of the Capital Stock by the Supervisory Board (Board of Directors)
Article 196(Amended SG 84-2000)

(1) (Previous Art. 196-Amended SG 84-2000)
The by-laws may empower the managing board, or the board of directors as the case may be, to increase the capital stock up to a certain nominal amount in the course of five years from the date of incorporation, by issuing new shares. A resolution to the same effect may also be passed by amending the by-laws in compliance with the requirements of Art. 192, Par. 3, for a period not exceeding five years from the date of registration of the amendment.
(2) (New SG 84-2000) Art. 194, Par. 1 and 2 shall apply in case of capital increase under the previous paragraph.
(3) (New SG 84-2000) The managing board, respectively the board of directors may dismiss shareholder or restrict shareholder's right under Art. 194, Par. 1only if the by-laws or the general meeting resolution passed by majority of 2/3 of the shares represented, empowers the mentioned bodies for the said action.

Increase of the Capital Stock from Company Funds
Article 197

(1) The general meeting may resolve to increase the capital stock by partial capitalisation of profits. The resolution shall be adopted within three months from the date that the annual statement for the previous year is approved, with a majority of the votes of three quarters of the shares represented at the meeting.
(2) The company's balance sheet shall be presented and the fact that the increase is from the company's own funds shall be explicitly stated upon filing the resolution to increase the capital stock for registration with the court.
(3) (Amended SG 84-2000) The new shares shall be allocated among shareholders, including the company when it possesses own stocks, on a pro rata basis. Any general meeting resolution in contravention of the latter provision shall be null and void.

Receipt of Shares
Article 198

(1) Upon registering the increase of the capital stock pursuant to the preceding article, the supervisory board, or the board of directors as the case may be, shall, without delay, invite the shareholders to receive their shares.
(2) New bearer shares which have not been claimed within one year of the date that the resolution to increase the capital stock was published in the State Gazette shall be sold on the stock exchange. The shareholders' rights shall lapse, and moneys from the sale shall be appropriated to the company's reserve fund.

Section VI
Reducing the Capital Stock

Ordinary Reduction
Article 199

(1) A reduction of the capital stock shall be implemented by a general meeting resolution.
(2) (Amended SG 84-2000)If there are several classes of shares, resolution of each class of shareholders shall be necessary to reduce the capital stock.
(3) The resolution shall set forth the purpose of the reduction and the method by which it is to be effected.

Methods of Reduction
Article 200

(1) The capital stock may be reduced:
1. by reduction of the nominal value of shares;
2. by cancellation of shares.

Reduction of Capital Stock by Cancellation of Shares
Article 201

(1) Shares may be canceled forcibly or after their acquisition by the company.
(2) (Amended SG 84-2000) Forcible cancellation of shares shall be allowed if the by-laws provides for such and the shares have been registered under this condition.
(3) The prerequisites for, and the method of, forcible cancellation shall be set forth in the by-laws.

Protection of Creditors
Article 202
(Amended SG 84-2000)

(1) The rules of Art. 150-3 shall apply for creditors whose claims have arisen prior to publication of the resolution on reduction.
(2)The rules of Par. 1 shall not apply when the reduction of the capital has been made with the purpose of covering the losses. In this case the shareholders shall not be released from the obligation to make installments.
(3) The rules of Par. 1 shall not apply also when the reduction is made with own shares which have not been paid in full, and have been acquired gratuitously or by or by means under Art. 247a, Par. 1-3. In these cases Art. 187c, Par. 4 shall apply respectively

Regime of Security or Payment
Article 203

(1) (Amended, SG No. 83/1999; 84/2000) The capital of the company may be simultaneously decreased and increased, so that the decrease shall have effect only if the increase is carried out.
(2) In the cases under Par. 1 the capital might be decreased beneath the minimum level required by the Law if with the increase of the capital the minimum level is achieved.
(3) The rule of Art 202, Par. 1 shall not apply if, as a result of the capital increase, the level of it before the change is not achieved or exceeded.

Section VII
Debentures

Procedure for Issuing Debentures
Article 204

(1) (Amended, SG ¹ 114/1999) Debentures /Bonds/ may be issued by a joint stock company at least two years after it has entered in the commercial register and if two annual statements have been approved by the general meeting.
(2) (Amended, SG ¹ 114/1999) The requirements under paragraph 1 shall not apply to debentures issued or guaranteed by the State or banks.
(3) Resolutions to issue debentures may be adopted only by the general meeting of shareholders.
(4) Debentures of same issue and same nominal value shall rank pari passu.
(5) (New - SG No. 63/1995) Debentures may be in the form of debenture stock and debenture certificates. The rules for shares stipulated in this Law shall apply to the issue, transfer and pledge of debenture stock and debenture certificates.

Requirements and Procedure for Offering
Article 205

(1) (Repealed - SG No. 63/1995)
(2) The commencement of the offering shall be advertised in the State Gazette.
(3) Debenture subscribers shall be provided with the general meeting resolution on issuing the loan and the annual financial statements for the preceding two years.

Closing of Offering
Article 206

(1) The raising of moneys and the delivery of the debentures shall be performed by a bank or specialised firm.
(2) Subscribers shall pay the relevant moneys into a special account with a bank specified by the company. The sums in the said account may not be used prior to the announcement that the offering has closed.
(3) The offering shall close when the advertised amount of the debenture loan has been subscribed or upon expiration of its term.
(4) The general meeting of shareholders shall determine the terms under which the loan shall be deemed contracted, and where the value subscribed for is in excess or in deficit of the amount initially announced, the general meeting of shareholders shall cause the supervisory board, or the board of directors as the case may be, to announce the closing of the offering.
(5) Should the offering be closed short of compliance with the terms provided for the contracting of the loan, moneys paid up shall be reimbursed to the subscribers together with such interest as accrued by the bank.

Issuing Preferred Debentures
Article 207

A company may not issue new debentures on preferential terms without the consent of the general meeting of debenture-holders.

First General Meeting of Debenture-Holders
Article 208

Within one month from the closing date of the offering the organs of the joint stock company shall call a general meeting of debenture-holders. The notice of the meeting shall be published. The meeting may transact business if not less than one tenth of the subscribed loan is represented.

Representation of Debenture-Holders
Article 209

(1) The holders of debentures of the same issue shall form a group for the protection of their interests before the company.
(2) The group shall be represented by trustees elected by the general meeting of debenture-holders. These trustees may not be more than three.

Limitations on Representation
Article 210

(1) The following may not be trustees as per the preceding article:
1. the debtor company;
2. other companies which hold more than one tenth of the debtor company's capital or in which the debtor company holds more than one tenth of the capital;
3. companies which have guaranteed, in part or in total, the liabilities assumed;
4. members of the supervisory board, the managing board or the board of directors of the company, or descendants, ascendants and spouses thereof;
5. persons who are prohibited by law from serving on company governing bodies;
(2) Trustees may be recalled by a general meeting resolution of debenture-holders.

Powers of the Trustee
Article 211

Trustees may perform acts to protect the debenture-holders' interests pursuant to resolutions of the general meeting of debenture-holders.

Participation of Trustees in the General Meeting of Shareholders
Article 212

(1) The trustees of debenture-holders may participate in the general meeting of shareholders without the right to vote. They may obtain information under the same terms as shareholders.
(2) Where decisions are adopted concerning the performance of obligations under the terms of the debenture loan, the general meeting of shareholders shall hear the opinion of the debenture-holders' trustees.

Remuneration of Trustees
Article 213

(1) The remuneration of the debenture-holders' trustees shall be fixed by the company and shall be paid on its account. Should the company fail to fix such remuneration, the general meeting of debenture-holders shall do so.
(2) Should the company object to the amount so fixed, the remuneration shall be fixed by an order of the district court upon application by the trustees.

General Meeting of Debenture-Holders
Article 214

(1) The general meeting of debenture-holders shall be called by the trustees of the debenture-holders.
(2) The general meeting may also be called upon the request of the holders of not less than 10 per cent of the debentures, or, if liquidation proceedings have commenced, upon the request of the liquidators of the company.
(3) The trustees of the debenture-holders shall be bound in duty to call the general meeting of debenture-holders upon receipt of notice from the governing bodies of the joint stock company as to:
1. a proposed amendment of the company's purposes or type, or for transformation of the company;
2. a new issue of preferred debentures.
(4) Each issue of debentures shall constitute a separate general meeting.
(5) The provisions for the general meeting of shareholders shall apply mutatis mutandis to the general meeting of debenture-holders.
(6) The general meeting of shareholders shall be bound in duty to review a general meeting of debenture-holders resolution.

Section VIII
Conversion of Debentures into Shares

Resolution on Conversion of Debentures into Shares
Article 215

(1) The general meeting may resolve on the issuing of convertible debentures. This type of debentures may not be issued by companies in which the State owns more than 50 per cent of the capital stock. The shareholders may subscribe preferentially such debentures under the terms which apply to a subscription for a new issue of shares.
(2) The procedure for the conversion of debentures into shares shall be specified in the general meeting resolution on the issuing.
(3) The general meeting of shareholders may lay down the terms under which holders of debentures which are not redeemable by conversion into shares may so convert them.
(4) The issue price of the converted debentures may not be lower than the nominal value of the shares which the debenture-holders would acquire by conversion.
(5) In case of reduction of the capital stock because of losses through a reduction of the number of shares or of the nominal value thereof, the rights of debenture-holders shall be reduced proportionally.

Terms of Validity of Resolution to Issue of New Debentures
Article 216

A resolution to issue new debentures convertible into shares shall be valid subject to approval by the general meeting of debenture-holders which have acquired the right to convert debentures into shares.

Conversion upon Increase of Capital Stock
Article 217

Upon adoption of a resolution to increase the capital stock, the managing board, or the board of directors as the case may be, shall determine the period within which debentures may be converted into shares. This period may not exceed three months.

Registration of the Altered Capital Stock
Article 218

The managing board, or the board of directors as the case may be, shall register any changes in the capital stock occurring as a result of conversion of debentures into shares.

Section IX
Joint Stock Company Organs

Types of Organs
Article 219

(1) (Previous Art. 219 - SG 84 - 2000)The joint stock company organs shall be:
1. the general meeting of shareholders;
2. the board of directors (one-tier system), or the supervisory board and the managing board (two-tier system).
(2) (New SG 84 - 2000) The sole owner of the capital of a sole owned joint stock company shall be competent on the issues of competence of the general meeting.

Subsection I
General Meeting of Shareholders

Composition of the General Meeting
Article 220

(1) The general meeting comprises the voting shareholders. A voting shareholder may participate in a general meeting either in person or by proxy.
(2) The members of the board of directors, or of the supervisory board and managing board as the case may be, shall participate in general meeting proceedings without the right to vote, unless such members are shareholders.

Competence
Article 221

The general meeting shall:
1. amend the by-laws;
2. resolve on increase or reduction of the capital stock;
3. resolve on transformation and dissolution of the company;
4. elect and recall the members of the board of directors, or of the supervisory board as the case may be, and determine their remuneration;
5. appoint and dismiss CPA auditors;
6. approve the annual financial statement as certified by the appointed auditor;
7. resolve on issuing of debentures;
8. appoint liquidators upon dissolution of the company, except in the event of bankruptcy;
9. relieve of responsibility the members of the supervisory board and managing board, or of the board of directors as the case may be;
10. resolve on other matters which by virtue of the law or the by-laws are in its competence.

Holding of General Meeting
Article 222

(1) A general meeting of shareholders shall be held at least once a year. The first general meeting may be held at any time within 18 months of incorporation.
(2)(New SG 84 - 2000) In case the losses exceed the half of the size of the capital, the general meeting shall be convened not later than 3 months of the losses establishment.
(3) (Previous Par. 2 - SG 84 2000) The general meeting shall elect a chairman and a secretary of the meeting, unless the by-laws provide otherwise.

Convening the General Meeting
Article 223

(1) The general meeting shall be convened by the board of directors, or by the managing board as the case may be. A general meeting may also be convened by the supervisory board, as well as on the request of the owners of not less than one tenth of the stock.
(2) (Amended, SG No 33/1999) Should the request of the owners of not less than one tenth of the capital not be granted within one month after the date of the request or the General Meeting is not called within three months after the date of request, the district court may convene the General Meeting or empower the shareholders which have so requested it, or a representative thereof, to convene the Meeting.
(3) (Amended, SG No. 100/1997, 84/2000) The general meeting shall be convened by notice in the State Gazette. If the company has not issued bearer stocks, the by-laws may provide for convening the meeting only with written notice.
(4) As a minimum the notice shall state:
1. the trade name and seat of the company;
2. the place, date and hour of the meeting;
3. the type of general meeting;
4. the formalities, if provided for in the by-laws, to be satisfied for attendance and exercise of the right to vote;
5. the agenda and business to be transacted, and the draft resolutions.
(5) (Amended, SG No. 100/1997) The time period from the publication to the opening of the meeting shall not be less than 30 days.

Right to Information
Article 224

All papers relative to the agenda of a general meeting must be placed at the disposal of the shareholders not later than the date of publication or mailing of the notice thereof. Such papers shall be available free of charge to any shareholder on demand.

List of Participants
Article 225

A list shall be drawn up of the shareholders or proxies present at the meeting, and the respective number of shares owned or represented. The shareholders or proxies shall certify their presence at the meeting by signature. The list shall be authenticated by the chairman and the secretary of the meeting.

Proxy
Article 226

A shareholder shall have the right to attend a general meeting by proxy executed in writing.

Quorum of Shareholders
Article 227

The by-laws may provide for a quorum of the shareholders. In the absence of such quorum a new meeting date shall be set which shall not be later than one month, and the general meeting at such latter date shall be valid regardless of the shares represented. The date of such second meeting may be stated in the original notice.

Voting
Article 228

(1) Voting rights shall originate upon payment of the contribution, unless otherwise provided in the by-laws.
(2) Where a proposed resolution affects the rights of a class of shareholders, each class shall vote separately.

Conflict of Interest
Article 229

A shareholder may not, either in person or by proxy, vote on:
1. actions brought by the company against it;
2. proceedings to realise the liability of such shareholder to the company.

Majority
Article 230

(1) General meeting resolutions shall be passed by majority vote of the shares represented, unless the law or the by-laws provide otherwise.
(2) Resolutions under 221, items 1_ 3, shall require a majority of at least two thirds of the shares represented. The by-laws may provide for another majority for these cases.

Minority
Article 230a

(New SG 84-2000)The shareholders representing 5% of the capital shall be entitled to:
1. to claim against the members of the supervisory and the managing board for the cause of damages to the company before the district court.
2. To require from the general meeting or district court the appointment of a controller who shall be authorized to inspect the annual audit report and to work out a report on his findings.
Resolutions
Article 231
(1) The general meeting may not pass resolutions on matters of which there has been no notification or advertisement pursuant to Article 223, unless all shareholders are present or are represented at the meeting and no one objects to the submission of such matters to debate.
(2) General meeting resolutions shall take effect immediately, unless such effect is deferred.
(3) (Amended, SG No. 100/1997, 84/2000) Resolutions to amend the by-laws, increase or reduce the capital stock, transform or dissolve the company, appoint or recall members of the boards, as well as to appoint liquidators, shall be registered in the commercial register and shall take effect after registration in the commercial register.

Minutes
Article 232

(1) The minutes of a general meeting shall be kept in a special book and shall comprise:
1. the place, date and hour of the meeting;
2. the names of the chairman and the secretary, and of the vote tellers;
3. the attendance of the managing and the supervisory board, and of other persons which are not shareholders;
4. the motions made on the substance of the debate;
5. the votes taken and the results thereof;
6. the objections made.
(2) The minutes of the meeting shall be signed by the chairman and the secretary, and by the vote tellers.
(3) Attached to the minutes shall be:
1. the list of participants;
2. the documents relative to the convening of the meeting.
(4) The minutes and the documents attached thereto shall be kept on file for not less than five years. Any