Subsection II General Provisions for the Two Systems of Administration

(1)

The members of the board of directors, the supervisory board and managing board shall be elected for not more than a five-year term of office, unless a shorter term is provided for in the by-laws.

(2)

The members of the first board of directors, or of the first supervisory board as the case may be, shall be elected for not more than a three-year term of office.

(3)

Directors may be reelected for any number of terms.

(4)

The members might be dismissed of the duties even before the end of the mandate for which thew have been elected.

(1)

A director may be any natural person possessing capacity. Where the by-laws so provide, a director may be a legal person. In this case the legal person shall designate a representative for performance of its duties on the board. The legal person shall bear unlimited liability and shall be liable jointly and severally with the other directors for the liabilities arising from acts of its representative.

(2)

A person may not be a director, if it:

1.

has been a member of an executive or comptrolling body during the preceding 2 years from the date of the decision to dissolve the company on grounds of bankruptcy and there remain unsatisfied creditors;

2.

(Repealed - SG 84/2000)

3.

does not meet other requirements provided for in the by-laws.

(1)

The members of the board of directors, or of the managing board as the case may be, shall represent the company collectively, unless otherwise provided by the by-laws.

(2)

The board of directors, or, as the case may be, the managing board subject to approval by the supervisory board, may delegate authority to one or several of its members to represent the company. The authority so delegated may at any time be revoked.

(3)

The names of the authorized representatives shall be registered in the commercial register and published in the State Gazette. For registration they shall present notarized signatures.

(4)

Restrictions on the representative power of the board of directors or the managing board or the persons authorized by then on the rules of Par. 2 shall not have effect to third parties.

(5)

The authorization and the revocation thereof shall be binding upon third parties after registration and publication.

The contracts between the sole owner of the company and the company itself when it is represented by him, shall be concluded in writing.

(1)

The managing board may pass resolutions with the prior approval of the supervisory board or with a unanimous resolution of the board of directors, on:

1.

closing down or transfer of enterprises or of substantial parts thereof;

2.

substantially altering the company's business;

3.

substantial organisational changes;

4.

long-term cooperation which is material to the company or the termination of such cooperation;

5.

establishment of a branch.

(2)

Objections that such acts have been performed in contravention of the preceding paragraph shall not be binding upon bona fide third parties.

(1)

The directors shall have equal rights and obligations, regardless of:

1.

any internal division of functions among the directors;

2.

(Supplemented, SG 84 - 2000) the provisions which confer managerial and representative authority to officers.

(2)

The directors must perform their functions in the interest of the company and not disclose the company's secrets even after they are no longer directors.

(3)

(New, SG 84 - 2000) The chairman of the supervisory board, respectively of the board of directors shall conclude the management contracts and the representative contract with the executive members.

(1)

The boards may pass resolutions if at least half the directors are present, whether in person or represented by another director. No director present may represent more than one absent director.

(2)

Resolutions shall be passed by a simple majority, unless otherwise provided by the by-laws.

(3)

The by-laws may provide that the board may pass resolutions in absentia if all directors have stated in writing their approval for the resolution.

Minutes shall be kept of all resolutions of the managing board, the supervisory board and the board of directors which shall be signed by all present members of the respective board.

(1)

The directors shall deposit a guarantee for their management of the affairs of the company in an amount determined by the general meeting, but not less than their three month gross income. The guarantee may be in the form of shares or debentures deposited with the company.

(2)

The directors shall be liable jointly and severally before the company for any damages caused through a fault of theirs.

(3)

Any director may be held harmless if it is established that it has no fault for the damage suffered by the company

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