Law on the Amendment and Supplementation of the Commercial Act

(Promulgated, State Gazette No. 48 of 1991, amended, SG No. 25 of 1992, Nos. 61 and 103 of 1993, supplemented, SG No. 63 of 1994, amended, SG No. 63 of 1995, Nos. 42, 59, 83, 86 and 104 of 1996, Nos. 58, 100 and 124 of 1997, supplemented, SG Nos. 39 and 52 of 1998, amended, SG No. 70 of 1998, No. 33 of 1999, supplemented, SG No. 42 of 1999, amended, SG Nos. 64, 81, 90, 103 and 114 of 1999, No. 84 of 2000, Nos. 28 and 61 of 2002, supplemented, SG No. 96 of 2002, amended, SG Nos. 19, 31 and 58 of 2003, Nos. 31, 39, 42, 43, 66, 103 and 105 of 2005, Nos. 38, 59, 80 and 105 of 2006, Nos. 59, 92 and 104 of 2007, Nos. 50, 67, 70, 100 and 108 of 2008, Nos. 12, 23, 32, 47 and 82 of 2009, Nos. 41 and 101 of 2010, No. 14 of 2011, Nos. 18 and 34 of 2011, Nos. 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, Nos. 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 2020)

§ 1. A new Chapter Fifteen “a” is created with Articles 260a–260ya:

“Company with Variable Capital

Section I

General Provisions

Definition

Art. 260a.
(1) A company with variable capital shall be incorporated by one or more natural or legal persons and shall be liable to creditors with its property.

(2) A company with variable capital may only be a micro or small enterprise within the meaning of the Small and Medium-Sized Enterprises Act.

Company name

Art. 260b.
The company name must contain the designation “company with variable capital” or the abbreviation “CVC”.

Articles of association

Art. 260c.
(1) The articles of association shall be concluded in written form and must contain:

1. the company name, registered office and address of management of the company;
2. the scope of activity;
3. the term, if any;
4. the type and amount of shares, their nominal value, the rights for the individual classes of shares, the special conditions for their transfer, if any;
5. the type and value of non-cash contributions, if any;
6. the management and the manner of representation;
7. the privileges which certain partners reserve for themselves, if agreed;
8. the manner of distribution of profit;
9. other conditions in connection with the incorporation, existence, management and termination of the company.

(2) Where the company is established by one person, an instrument of incorporation shall be drawn up.

Registration

Art. 260d.
(1) For the registration of the company in the Commercial Register, the following shall be required:

1. submission of the articles of association for announcement;
2. election of a manager or of a management board.

(2) The Commercial Register shall record the circumstances under Article 260c, paragraph 1, items 1–3 and item 7, as well as the names of the members of the management board or of the manager.

(3) Upon amendment or supplementation of the articles of association, a certified copy containing all amendments and supplements shall be submitted to the Commercial Register for announcement.

Section II

Capital and Company Shares

Capital and shares

Art. 260e.
(1) The capital of the company shall be variable and shall not be subject to entry in the Commercial Register. By a resolution of the regular annual general meeting convened to consider the annual financial statements, the amount of the capital at the end of the financial year shall be determined, as well as its change compared to the previous financial year.

(2) The capital of the company shall be divided into shares. Shares from the same class shall be of equal nominal value.

(3) Against the subscribed shares, the partners shall make contributions. The nominal value of each share shall correspond to the amount of the partner’s contribution.

Company share

Art. 260f.
(1) The company share shall give the right to vote in the general meeting of the partners, the right to dividend and to a liquidation share proportional to the nominal value of the share, unless otherwise agreed in the articles of association. The rights under the share shall arise after payment of the contribution to the capital.

(2) Where it is provided in the articles of association, the company may issue shares with special rights (preferred shares). Shares with equal rights shall form a separate class. Restriction of the rights of shares from the same class shall not be permitted.

(3) Preferred shares may provide more than one vote in the general meeting, guaranteed or additional dividend, liquidation preference, the right of redemption of shares, as well as other rights provided by law or by the articles of association.

(4) The articles of association may provide that the preferred shares shall be without voting rights. Where dividend on preferred shares without voting rights is not paid for one year and the delayed payment is not made in the next year together with the dividend due for that year, the preferred share shall acquire voting right until the delayed dividends are paid. In such cases, the preferred shares shall be taken into account when determining quorum and majority.

Register of partners

Art. 260g.
(1) The company shall keep a register of partners, in which the names and addresses, the personal identification number or unified identification code, the date of acquisition of shares, the number of shares, the value and type of the contributions against which the shares are acquired, and the class of shares shall be entered. The register shall be kept by the management body or by a person designated by it.

(2) The management body shall ensure that the entries in the register of partners and the changes in them are recorded no later than 7 days after submission of the relevant documents according to the law and the articles of association.

(3) Each partner shall have the right to access the register of partners and to receive extracts from it. A third interested person shall have the right to request from the management body an extract regarding the shares held by a specific partner.

Transfer of shares

Art. 260h.
(1) A share may be transferred and inherited.

(2) The transfer of a share shall be carried out in writing.

(3) The transfer of a share shall have effect with respect to the company from the moment of entry of the transfer in the register of partners.

(4) The articles of association may provide conditions and restrictions regarding the transfer of shares, including a requirement for consent of the general meeting or of another body of the company.

Acquisition of own shares

Art. 260i.
(1) The company may acquire its own shares only if this is provided for in the articles of association and under the conditions specified therein.

(2) The total nominal value of the shares acquired by the company may not exceed the limits provided by law or by the articles of association.

(3) Shares acquired by the company shall not grant the right to vote, to dividend or to liquidation share.

Increase and decrease of capital

Art. 260j.
(1) The capital of the company may be increased by issuing new shares.

(2) The capital of the company may be decreased by cancellation of shares or by reduction of the nominal value of shares.

(3) The conditions and procedure for increasing and decreasing the capital shall be determined in the articles of association.

Section III

Rights and Obligations of Partners

Rights and obligations

Art. 260k.
(1) Each partner shall have the right:

1. to participate in the management of the company;
2. to receive information about the activities of the company;
3. to inspect the books and documents of the company;
4. to receive a share of the profit;
5. to receive a liquidation share.

(2) Each partner shall be obliged:

1. to make the contribution corresponding to the subscribed shares;
2. to comply with the resolutions of the general meeting;
3. to assist in achieving the objectives of the company.

Exclusion of partner

Art. 260l.
(1) A partner who fails to fulfill his or her obligations may be excluded by resolution of the general meeting.

(2) The excluded partner shall lose the rights attached to the shares, unless otherwise provided in the articles of association.

(3) The shares of the excluded partner shall be distributed among the remaining partners or acquired by the company under the conditions determined in the articles of association.

Termination of participation

Art. 260m.
(1) The participation of a partner in the company shall be terminated:

1. upon death or placing under full interdiction of the natural person or upon dissolution of the legal person;
2. upon exclusion;
3. upon declaration of bankruptcy;
4. upon withdrawal of the partner;
5. in other cases provided by law or by the articles of association.

(2) In the cases under paragraph 1, the management body shall delete the partner from the register of partners within 7 days.

(3) The company shall pay to the partner or to his or her heirs the value of the share determined on the basis of the financial statements as of the end of the month during which the participation was terminated, unless otherwise provided in the articles of association.

Section IV

Management

Governing bodies

Art. 260n.
(1) The governing bodies of the company shall be:

1. the general meeting of partners;
2. a manager or a management board.

(2) Where the company has one partner, that partner shall exercise the powers of the general meeting.

General meeting

Art. 260o.
(1) The general meeting shall consist of all partners.

(2) Each partner shall have voting rights proportional to the nominal value of the shares held, unless otherwise provided in the articles of association.

(3) Voting rights shall be exercised by partners entered in the register of partners as of the last day of the month preceding the date of the general meeting.

Convening of the general meeting

Art. 260p.
(1) The general meeting shall be convened by the manager or by the management board.

(2) The general meeting may also be convened at the request of partners holding shares representing at least one-tenth of the capital.

(3) The invitation shall be sent in writing and shall contain the agenda, the date, the hour and the place of the meeting.

Competence of the general meeting

Art. 260q.
The general meeting shall:

1. amend and supplement the articles of association;
2. issue new shares and determine the conditions for their subscription;
3. transform and terminate the company;
4. elect and dismiss the manager or members of the management board;
5. determine their remuneration and release them from liability;
6. adopt the annual financial statements;
7. distribute the profit;
8. decide on other matters provided by law or by the articles of association.

Quorum and majority

Art. 260r.
(1) The general meeting may hold a session if partners representing more than half of the total number of shares are present, unless the articles of association provide otherwise.

(2) Resolutions shall be adopted by a majority of the votes of the shares represented at the meeting, unless the law or the articles of association require a larger majority.

(3) Resolutions for amendment and supplementation of the articles of association, transformation or termination of the company shall be adopted by a majority of two-thirds of the votes, unless the articles of association provide for a larger majority.

Manager / Management board

Art. 260s.
(1) The manager or the members of the management board shall organize and manage the activities of the company in accordance with the law and the articles of association.

(2) The manager or the members of the management board shall represent the company before third parties.

(3) The manager or the members of the management board shall be liable for damages caused to the company as a result of culpable non-performance of their duties.

Representation

Art. 260t.
(1) The company shall be represented by the manager or by the members of the management board.

(2) The manner of representation shall be determined in the articles of association.

(3) Limitations of the representative powers of the manager or of the management board shall have no effect with respect to third parties.

Section V

Transformation and Termination

Transformation

Art. 260u.
(1) The company may be transformed into another type of commercial company in accordance with the procedure provided by law.

(2) The transformation shall be carried out by resolution of the general meeting.

Termination

Art. 260v.
(1) The company shall be terminated:

1. upon expiration of the term specified in the articles of association;
2. by resolution of the general meeting;
3. by decision of the court in cases provided by law;
4. in other cases provided by law or by the articles of association.

(2) Upon termination of the company, liquidation shall be carried out, unless bankruptcy proceedings are opened.

Liquidation

Art. 260w.
(1) Upon termination of the company, a liquidator shall be appointed.

(2) The liquidator shall settle the obligations of the company, collect its receivables and distribute the remaining property among the partners.

(3) The distribution of the property shall be carried out in proportion to the nominal value of the shares, unless otherwise provided in the articles of association.

Additional provisions

§ 2.
In Article 64, paragraph 1, a new item 6 shall be created:
“6. company with variable capital.”

§ 3.
In Article 262p, a new paragraph 5 shall be created:
“(5) The resolution for transformation of a company with variable capital shall be adopted by the general meeting of partners with a majority of three-quarters of the votes.”

§ 4.
In Article 263t, a new paragraph 8 shall be created:
“(8) Where a company with variable capital participates in a transformation, the rules applicable to partnerships shall apply.”