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Article 4.
Establishment of a company
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A joint stock company is established by not less than three natural and/or legal persons except cases when such joint stock company is established by control bodies authorised to manage the state property.
The number of founders of a joint stock company established by control bodies authorised to manage the state property is not limited. Each one of them separately (individually) can be the founder of a joint stock company.
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A company functions on a basis of the articles of association approved at a general meeting (conference) of the founders. The articles of association must specify:
- the name, type, legal address, line in business of the company;
- the founder or composition of founders;
- the registered fund sum;
- category, kind, nominal value of shares proposed to issue, their quantity acquired by the founder or founders;
- measures foreseen at non-fulfilment of their obligation by shareholders;
- personnel and powers of the managing bodies, of the control and finance and auditing bodies;
- list of funds and procedures for their creation.
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The establishment of a company includes a founding conference, conducted by the founder(s), arranging subscription of the shares and is finalised by registration as specified by the Civil Code of the Azerbaijan Republic.
When a state-owned enterprise participates in establishing a joint stock company a Ministry of Justice's conclusion must be submitted.
Registration must be carried out within a month after presentation of the appropriate documents.
Article 5
Establishment of a joint stock company on a state-owned enterprise basis
A joint stock company can also be established through transformation of a state-owned enterprise. In this case conditions for such transformation of the state-owned enterprise into a joint stock company are fixed by Milli Medjlis of the Azerbaijan Republic.
Article 6
Subscription for company's shares
- Shares of a closed type company are allotted in accordance with the agreement between the founders.
- In a open type joint stock company subscription for shares is arranged by the founders. The company can dispose its shares independently or through banks and stock exchanges.
- Subscription for shares or distribution of shares of a company are implemented on a basis of a founding agreement or a founding plan (program).
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Subscription for shares must be announced in the press. Such announcement should indicate the name, address (founder), duration of activity of the company, size of the registered fund, nominal value, quantity of shares, rights given to shareholders, initial and expiry date of the subscription, address and date of the proposed conference.
Subscription duration must not exceed 6 months.
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The persons participating in the subscription must prepay 10 per cent of a share nominal value. The said persons are given a written obligation to sell a certain quantity of shares by the founders.
Subscription is ended by expiration of the period indicated in the announcement. If by that time less than 60 per cent of shares are subscribed, then the company is considered as not established and within 30 days the prepaid sums or contributed property are returned to the subscribers.
By the date of the founding meeting the subscribers must pay 30 per cent of the shares nominal value, taking into account the sums contributed earlier. The founders give temporary certificates to such persons.
- In the case of a closed type company the founders must pay 50 per cent of the shares nominal value by the date of the founding meeting.
Article 7
Founding meeting of the company
Founding meeting of the company is to be held within 2 months after the subscription is ended. If the founding meeting is not held within the said period the subscriber has a right to take his share away.
The founding meeting conducting procedure must be described in the relevant announcement.
The founding meeting has to solve the following questions:
- to make a decision about establishment of the company;
- to decrease the registered fund sum if the subscription volume is less than was planned;
- to elect a supervisory council, executive body and control (auditing) commission of the company for its first period of activity;
- to determine values of shares contributed in kind.
Not less than 50 per cent of the subscribers must be present at the founding meeting.
In case of lack of the quorum on the first founding meeting the founders summon the meeting again and it must be attended by not less than 50 per cent of the subscribers.
If the quorum is not achieved even this time, the company is considered as not established.
Decisions on the establishment of the company, election of the supervisory council, executive and control bodies, granting benefits to the founders are adopted by a majority of the present participants, and on all other questions - by a simple majority.
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