Section III Shares

(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.

(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.

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

(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.

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.

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.

(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.

(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.

(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.

(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.

(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.

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.

(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.

(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.

(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.

(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.

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.

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.

(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. 

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