(Promulgated SG No. 48 of 1991, amended SG No. 25 of 1992, No. 61 and 103 of 1993, supplemented SG No. 63 of 1994, amended SG No. 63 of 1995, No. 42, 59, 83, 86 and 104 of 1996, No. 58, 100 and 124 of 1997, supplemented SG No. 39 and 52 of 1998, amended SG No. 70 of 1998, No. 33 of 1999, supplemented SG No. 42 of 1999, amended SG No. 64, 81, 90, 103 and 114 of 1999, No. 84 of 2000, No. 28 and 61 of 2002, supplemented SG No. 96 of 2002, amended SG No. 19, 31 and 58 of 2003, No. 31, 39, 42, 43, 66, 103 and 105 of 2005, No. 38, 59, 80 and 105 of 2006, No. 59, 92 and 104 of 2007, No. 50, 67, 70, 100 and 108 of 2008, No. 12, 23, 32, 47 and 82 of 2009, No. 41 and 101 of 2010, No. 14 of 2011, No. 18 and 34 of 2011, No. 53 and 60 of 2012, supplemented SG No. 15 of 2013, amended and supplemented SG No. 20 of 2013, amended SG No. 27 of 2014, supplemented SG No. 22 of 2015, amended and supplemented SG No. 95 of 2015, amended SG No. 13 of 2016, amended and supplemented SG No. 105 of 2016, No. 62 and 102 of 2017, No. 15 of 2018, supplemented SG No. 27 of 2018, amended SG No. 88 of 2018, amended and supplemented SG No. 28 of 2019, supplemented SG No. 33 of 2019, amended and supplemented SG No. 83 of 2019, No. 64 of 2020, amended SG No. 104 of 8 2020)
§ 1. Chapter Fifteen "a" is created with Arts. 260a–260ya:
"Variable Capital Company
Section I
General Provisions
Definition
Art. 260a. (1) A variable capital company is incorporated by one or more natural or legal persons and is liable to creditors with its assets.
(2) A variable capital company may only be a micro or small enterprise within the meaning of the Law on Small and Medium Enterprises.
Company Name
Art. 260b. The company name must contain the designation "variable capital company" or the abbreviation "VCC."
Articles of Association
Art. 260c. (1) The articles of association are concluded in written form and must contain:
(2) Where the company is established by one person, an instrument of incorporation is drawn up.
Registration
Art. 260d. (1) For registration of the company in the commercial register, it is necessary:
(2) The data under Art. 260c, para. 1, items 1–3, item 7 and the names of the members of the management board or the manager, respectively, are entered in the commercial register.
(3) Upon amendment or supplement of the articles of association, a copy thereof containing all amendments and supplements, certified by the body representing the company, is submitted to the commercial register for announcement.
Section II
Capital and Company Shares
Capital and Shares
Art. 260d. (1) The capital of the company is variable and is not subject to entry in the commercial register. By resolution of the regular annual general meeting convened to consider the annual financial statements, the amount of the capital at the close of the financial year and its change relative to the preceding financial year are established.
(2) The capital of the company is divided into shares. Shares of one class have the same nominal value.
(3) Partners make contributions in respect of the shares they have subscribed. The nominal value of each share corresponds to the amount of the partner's contribution.
Company Share
Art. 260e. (1) A company share confers the right to vote at the general meeting of partners, the right to a dividend and to a liquidation share, proportionate to the nominal value of the share, unless otherwise agreed in the articles of association. The rights under the company share arise upon payment of the contribution to the capital.
(2) If agreed in the articles of association, the company may issue company shares with special rights (privileges). Company shares with the same rights form a separate class. Restriction of the rights attaching to shares of one class is not permitted.
(3) Privileged company shares may confer more than one vote at the general meeting of partners, a guaranteed or additional dividend or liquidation share, the right to redemption of the company shares, as well as other rights provided for in this law or in the articles of association.
(4) The articles of association may provide that privileged company shares shall carry no voting rights. Where the dividend on privileged company shares without voting rights is not paid for 1 year and the delayed payment is not made in the following year together with the dividend thereon, the privileged share acquires the right to vote until payment of the delayed dividends. In this case, the privileged shares are counted in determining the required quorum and majority.
Register of Partners
Art. 260f. (1) A register of partners is maintained in the company, in which the names and address, personal identification number/personal number of a foreigner or unified identification code of all partners, the date of acquisition of the shares, the number of shares, the value and type of contributions in respect of which the shares were acquired, and the class of shares are recorded. The register is maintained by the management body or a person designated by it.
(2) The management body is obliged to ensure the entry in the register of partners of the circumstances under para. 1 and of changes thereto no later than 7 days from the submission of the documents in accordance with the requirements of the law and the articles of association.
(3) Each partner has the right of access to the register of partners of the company, as well as to an extract therefrom. An interested third party has the right to request from the management body of the company an extract from the register of partners relating to the shares held by a specific partner.
Transfer and Inheritance of Company Shares. Acquisition of Own Company Shares
Art. 260g. (1) A company share may be inherited, transferred and pledged.
(2) The transfer of company shares is effected freely, unless otherwise agreed in the articles of association. The agreement for the transfer of a company share is concluded in written form with notarially certified signatures.
(3) Unless otherwise agreed in the articles of association, upon the death of a partner, those heirs who have expressed a wish to do so shall join the company. The heirs declare their request to join the company within 3 months of the opening of the succession. If the heirs do not wish to become partners, the company pays them the value of the deceased partner's company share at the time of death.
(4) The inheritance, transfer and pledging of company shares must be entered in the register of partners in order to have effect against the company.
(5) The company may acquire its own company shares under the conditions and procedure provided for in the articles of association. The total nominal value of own shares may not exceed 50 percent of the total value of the shares. The company is obliged to transfer within three years the own shares it holds that exceed this amount. Otherwise, they are cancelled.
(6) The company may not exercise the rights attaching to its own shares until their transfer, and they are not counted in determining the quorum and majority for holding a general meeting of partners. Own shares are described in the annual financial statements.
Restrictions and Special Rights
Art. 260h. (1) The articles of association may provide for a prohibition on the disposal of company shares for a specified period of time.
(2) The articles of association may provide for special rights and obligations of partners, such as the right of one or more partners to preferential purchase of shares offered for sale by a partner or issued by the company, the right of one or more partners to sell all or part of the shares they hold under the same conditions as those under which another partner transfers their shares, and others.
(3) The articles of association may provide for conditions under which, by resolution of the general meeting, a partner may be required to transfer their shares, and an obligation may be agreed that until the transfer is effected, the partners may not exercise their voting right at the general meeting. In the event that within a period of 1 month from notification the partner does not transfer the company shares, their shares may be redeemed by the company under the conditions determined in the articles of association, unless otherwise provided in the articles of association.
(4) The articles of association may provide that in the event of a change of control in a legal person that is a partner, the latter must notify the company. In this case, the general meeting may resolve that the partner shall not exercise their voting right or shall be excluded, with the company acquiring their shares.
(5) The restrictions and special rights under paras. 1–4 are adopted or revoked by resolution of the general meeting passed by a majority of 2/3 of the votes.
(6) Transfer of company shares in breach of the arrangements in the articles of association is not opposable to the company and third parties, unless the general meeting of partners resolves otherwise.
Agreements for the Grant of the Right to Acquire Shares
Art. 260i. (1) The general meeting may grant to persons employed by the company the right to acquire shares, which may be exercised only through the transfer of the company's own shares.
(2) The general meeting may authorise the management board or the manager, respectively, for a period of no more than 3 years, to adopt resolutions for granting the right to acquire shares under para. 1.
(3) The conditions and procedure for acquiring and exercising the right are determined by the resolution of the general meeting or of the management board or manager, respectively, when authorised to do so by the general meeting. The transfer of all or part of the acquired shares may be prohibited for a period of no more than 5 years from the date of acquisition.
(4) In implementation of the resolution under para. 1 or 2, an agreement for granting the right to acquire shares is concluded between the company and the respective employee.
(5) The right to acquire shares is non-transferable. In the event of death, the rights may be exercised by the heirs within a period of up to 6 months from the date of death, if the conditions for their exercise had arisen before the date of death.
(6) The total number of shares acquired upon the exercise of the rights to acquire shares by persons employed by the company may not exceed 15 percent of all shares.
(7) At the end of the financial year, the management board or the manager, respectively, establishes the number and value of shares acquired during the financial year under para. 1.
(8) The management board or the manager, respectively, presents to the partners together with the annual financial statements for the respective year a report on:
Section III
Rights and Obligations of Partners
Rights and Obligations
Art. 260j. (1) Every partner has the right to participate in the management of the company and in the distribution of profit, to be informed of the progress of the company's affairs, to inspect the company's books and the right to a liquidation share. Other rights may also be agreed in the articles of association, and restrictions on the exercise of rights may be established.
(2) The partner is obliged to pay the contribution in respect of the subscribed share within a period determined by the general meeting, to comply with the resolutions of the general meeting and to assist in carrying out the company's activities, unless otherwise agreed in the articles of association.
Consequences of Non-Fulfilment of Obligations. Exclusion
Art. 260k. (1) A partner who has not fulfilled their obligation to make a contribution shall be deemed excluded if they fail to fulfil their obligation within an additional period determined by the general meeting, which may not be shorter than one month. The period is determined by a majority of more than half of the votes. The manager/executive member notifies the partner in writing of the additional period and warns them of exclusion. The excluded partner loses their right to the contributions made.
(2) A partner may be excluded by the general meeting in other cases specified in the articles of association.
(3) The company shares of the excluded partner are assumed by resolution of the general meeting by the remaining partners and/or by the company under the conditions and procedure determined in the articles of association.
Termination of Participation
Art. 260l. Participation of a partner is terminated:
(2) Within seven days from the date of termination, the management body removes the partner from the register of partners.
(3) The company pays the partner the value of their company share at the time of termination, unless otherwise agreed in the articles of association.
Section IV
Management
Bodies
Art. 260m. (1) The bodies of the company are:
(2) In a sole-member company, the sole partner decides the matters within the competence of the general meeting.
General Meeting
Art. 260n. (1) The general meeting consists of all partners.
(2) Each partner has as many votes at the general meeting as correspond to the nominal value of their share, unless otherwise provided in the articles of association.
(3) The right to vote is held by partners entered in the register of partners as at the last day of the month preceding the day of holding the general meeting.
Competence
Art. 260o. The general meeting:
Quorum and Majority
Art. 260p. (1) The articles of association may provide for a quorum requirement of the total number of votes. Resolutions under Art. 20, items 1–4 are adopted if at least half of the votes are represented at the general meeting.
(2) In the absence of a quorum in the cases under para. 1, a new session may be scheduled and it is lawful regardless of the shares represented, if the time of holding the new session is indicated in the notice for the first one.
(3) Resolutions of the general meeting are adopted by a majority of the votes represented, unless otherwise provided by the law or the articles of association. For resolutions under Art. 20, items 1–3, a majority of 2/3 of the votes represented is required, unless the articles of association provide for a greater majority.
(4) Where the law or the articles of association provide for voting by class, the rules for quorum and majority apply to each class separately.
(5) The articles of association may provide that specifically named partners, as well as one or more partners holding at least 30 percent of the votes at the general meeting, have privileges in exercising the right to vote and/or the right of veto in the adoption of resolutions by the general meeting.
Convening
Art. 260q. (1) The general meeting is convened by the management board or the manager, respectively. It may also be convened at the request of partners holding at least 5 percent of all votes.
(2) If within one month from the submission of the request under para. 1 the general meeting is not convened, or if the general meeting is not held within a 3-month period, the partners who requested the convening may convene the general meeting themselves by filing the notice of convening in the commercial register.
(3) The convening of the general meeting is effected through a written notice filed in the commercial register at least 15 days before the date of the general meeting. It may also be convened with a written notice or a notice sent by electronic means with explicit confirmation of receipt, received at least 7 days before the date of the general meeting.
(4) The notice contains at least the following information:
Right to Information
Art. 260r. The written materials related to the agenda of the general meeting must be made available to the partners in the manner provided for in the articles of association, no later than the date of filing or sending the notices convening the general meeting.
Authorisation
Art. 260s. A partner may be represented at the general meeting by an expressly authorised person by written power of attorney. A partner that is a legal person is represented by the person entitled to represent it or by an expressly authorised person. Sub-authorisation is not permitted.
Conduct
Art. 260t. (1) The general meeting is held at least once a year by 30 June at the registered office of the company.
(2) The general meeting elects a chairperson and secretary, unless otherwise provided in the articles of association.
(3) For the session of the general meeting, a list of the attending partners or their representatives and the number of voting rights they exercise is drawn up. The list is certified by the chairperson and secretary of the general meeting. Partners and authorised representatives certify their attendance with a signature on the list of attendees.
(4) The articles of association may provide for resolutions to be adopted in absentia, if all partners have declared in writing or by electronic means their consent to the resolution.
(5) The articles of association and/or the notice convening the general meeting may provide for the possibility of the general meeting being held and/or a partner participating through the use of electronic means via one or more of the following methods:
(6) The participation of partners in the general meeting through the use of electronic means is taken into account in determining the quorum, and the vote is recorded in the minutes of the general meeting. Appended to the minutes of the general meeting is also a list of the persons who exercised their right to vote at the general meeting by electronic means and the number of their votes, which is certified by the chairperson and secretary of the general meeting.
(7) The company ensures the necessary measures for the identification of partners and authorised representatives through the use of electronic means and for the security of the connection, only insofar as these are necessary to achieve those objectives.
Resolutions. Minutes
Art. 260u. (1) The general meeting may not adopt resolutions concerning matters not included in the notice convening it, except where all partners are present or represented at the meeting and no one objects to the raised matters being discussed.
(2) The resolutions of the general meeting take effect immediately, unless their effect is postponed.
(3) Resolutions regarding the amendment and supplement of the articles of association, the election and dismissal of members of the management board or the manager, respectively, as well as the appointment of liquidators, the transformation and termination of the company, take effect after the registration of the respective circumstances in the commercial register.
(4) Minutes of the session of the general meeting are kept on paper and/or electronic medium.
(5) The minutes of the general meeting are signed by the chairperson and secretary of the meeting and by the vote counters, and the following are appended thereto:
Management Board
Art. 260v. (1) The company is managed and represented by a management board. The number of members of the management board is determined in the articles of association.
(2) A member of the management board may be a legally capable natural person, as well as a legal person. In this case, the legal person designates a representative to fulfil its obligations on the management board. The legal person is jointly and severally and unlimitedly liable together with the other members of the management board for the obligations arising from the actions of its representative.
(3) The management board elects one of its members as chairperson.
Mandate
Art. 260w. (1) The members of the management board are elected for a term determined in the articles of association. They may be re-elected without limitation.
(2) A member of the management board may request to be removed from the commercial register by written notice to the company. Within one month of receipt of the notice, the company must file for registration of their dismissal in the commercial register. If the company fails to do so, the interested member of the management board may themselves file for registration of this circumstance, which shall be registered regardless of whether another person has been elected in their place.
Sessions
Art. 260x. (1) Sessions of the management board are convened and chaired by the chairperson, who is obliged to convene a session upon written request of one third of its members. If the chairperson does not convene the session within a one-week period, it may be convened by any one of the members of the management board. In the absence of the chairperson, the session is chaired by a member of the management board designated by it.
(2) Resolutions are adopted if at least half of the members are present in person or represented by another member of the management board, with no present member being able to represent more than one absent member, unless otherwise agreed. A person with whom there is a two-way communication link guaranteeing the establishment of their identity and allowing their participation in the deliberations and adoption of resolutions shall also be considered present. The vote of such a member is certified in the minutes by the person chairing the session.
(3) Resolutions are adopted by a simple majority of the present members, unless otherwise agreed. Resolutions may also be adopted in absentia, if all members have declared in writing their consent to the resolution.
Representation
Art. 260y. (1) The management board entrusts the management and representation of the company to one or several executive members elected from among its members, and determines their remuneration. The executive members must be fewer than the remaining members of the management board. The authorisation may be withdrawn at any time.
(2) The names of the persons authorised to represent the company are entered in the commercial register. Upon registration, they submit a notarially certified consent with a specimen signature.
(3) The authorisation and its withdrawal have effect against bona fide third parties after their entry in the commercial register.
Obligations and Liability
Art. 260z. (1) The members of the management board perform their obligations with the care of a prudent merchant, taking into account the risk of the activity relative to the expected income for the company.
(2) The members of the management board prefer the interest of the company to their own interest. They avoid conflicts of interest between their own interest and the interest of the company, and if such a conflict arises, they disclose it immediately to the management board and do not participate in, nor exert influence over other members of the management board in, the adoption of resolutions in such cases.
(3) No later than the commencement of the session, a member of the management board is obliged to notify its chairperson in writing that they or a related person has an interest in a matter under consideration, and does not participate in the adoption of the relevant resolution, without being excluded from the determination of the quorum.
(4) The members of the management board are jointly and severally liable for damages caused to the company.
Manager
Art. 260aa. (1) The articles of association may provide that the company is managed and represented by a manager. Art. 260v, paras. 1 and 2, Arts. 260w, 260y, 260z, paras. 1 and 2 apply accordingly to the manager.
Section V
Transformation and Termination
Transformation
Art. 260ab. (1) If at the end of the financial year the company ceases to meet the requirements for a micro or small enterprise within the meaning of the Law on Small and Medium Enterprises, it shall be transformed into a capital company in accordance with the procedure of Section III of Chapter Sixteen.
(2) If the company is not transformed by the end of the following financial year, it shall be terminated by the district court at the registered office of the company upon a claim by the prosecutor.
Termination
Art. 260ac. (1) The company is terminated:
(2) Other grounds for termination of the company may be provided for in the articles of association.
(3) By resolution of the district court at the registered office of the company, it may be terminated:
(4) A company in which the sole partner is a natural person is terminated upon their death, unless otherwise provided or unless the heirs request the continuation of the activity.
(2) Where the sole partner is a legal person, the termination of that legal person also results in the termination of the company."
§ 2. In Art. 64, para. 1, item 6 is created:
"6. variable capital company."
§ 3. In Art. 262p, para. 5 is created:
"(5) The resolution for the transformation of a variable capital company is adopted by the general meeting of partners by a majority of 3/4 of the votes."
§ 4. In Art. 263t, para. 8 is created:
"(8) Where a variable capital company participates in a transformation, the rules for personal companies apply to it."
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