Section VII Debentures

(1)

(Amended, SG 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 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.

(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(Repealed - SG No. 63/1995)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.

(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.

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

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.

(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.

(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.

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

(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.

(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.

(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.

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