Section X Annual Closing of Accounts and Distribution of Profits

Each year not later than the last day of February the board of directors, or the managing board as the case may be, shall draw up the annual report and the financial statement for the previous calendar year, and shall submit these to the certified public accountants appointed by the general meeting.

(1)

The company shall set up a reserve fund.

(2)

The sources of financing the reserve fund shall be:

1.

At least one tenth of profit which shall be set aside until the fund's assets reach one tenth or more of the company's capital stock or such other larger proportion as the by-laws may provide;

2.

the proceeds obtained in excess of the nominal value of shares and debentures upon their issuing;

3.

the total of the additional payments made by the shareholders for preferences given them with shares;

4.

other sources provided for by the by-laws or by a general meeting resolution.

(3)

Disbursements from the reserve fund may be made only for:

1.

covering losses for the current year;

2.

covering losses for the previous year.

(4)

When the assets of the reserve fund exceed one tenth of the company's capital stock, or any other larger proportion thereof as may be provided for in the by-laws, the excess amount may be used for increase of the capital stock.

The annual report shall comprise a review of the company's operations over the year and its current state of affairs, and the accounting notes to the annual financial statement.

(1)

The dividends and interests under Art. 190, Par. 2 shall paid only if according the inspected and approved on the rules of Section XI audit report for the respective year, the net value of the assets reduced with the sum of the dividends and interests to be paid is not less than the sum of the capital of the company, Fund Reserve and other funds the company is obliged to establish by the Law or by-laws.

(2)

Under the meaning of the previous paragraph, the net value of the assets shall be  the difference between the rights and obligation of the company according to its balance sheet.

(3)

The payments under Par. 1 shall be made to size of the profit of the company for the respective year, the non-distributed profit of the previous years, the part of the Reserve Fund and other funds of the company exceeding the minimum determined by the Law or the by-laws, and reduced with the uncovered losses of the preceding years and the sum of the deductions for the Reserve Fund and other funds which the company is obliged to establish by the Law or by-laws.

(4)

If payment in lack of the prerequisites of Par. 1-3 have been made, the shareholders shall be obliged to return the received sums only if the company proves that they have knew or might have known for the lack of the said prerequisites.

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