Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
21 December 2000 [shall
come into force on 30 December 2000];
29 March 2001 [shall come into force on 31 March
2001];
26 June 2001 [shall come into force on 30 June
2000];
14 February 2002 [shall come into force on 15 March
2002];
22 April 2004 [shall come into force on 21 May
2004];
16 June 2005 [shall come into force on 20 July
2005];
16 March 2006 [shall come into force on 10 April
2006];
24 April 2008 [shall come into force on 28 May
2008];
18 December 2008 [shall come into force on 21 January
2008];
15 April 2010 [shall come into force on 1 May
2010];
16 June 2011 [shall come into force on 1 July
2011];
8 July 2011 [shall come into force on 13 July
2011];
14 June 2012 [shall come into force on 10 July
2012];
29 November 2012 [shall come into force on 1 January
2012];
2 May 2013 [shall come into force on 1 July 2013];
6 June 2013 [shall come into force on 1 July 2013];
19 September 2013 [shall come into force on 18 October
2013];
6 November 2013 [shall come into force on 1 January
2014];
16 January 2014 [shall come into force on 17 February
2014];
21 May 2015 [shall come into force on 4 June 2015];
23 March 2017 [shall come into force on 29 March
2017];
15 June 2017 [shall come into force on 13 July
2017];
20 March 2020 [shall come into force on 22 March
2020];
17 December 2020 [shall come into force on 12 January
2021];
6 July 2021 [shall come into force on 1 August
2021];
16 June 2022 [shall come into force on 1 July
2023];
11 May 2023 [shall come into force on 1 June 2023].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
|
The Saeima1 has adopted and
the President has proclaimed the following law:
Commercial
Law
Part A
GENERAL PRINCIPLES OF COMMERCIAL ACTIVITIES
Division
I
MERCHANTS AND COMMERCIAL ACTIVITIES
Section 1. Merchants and Commercial
Activities
(1) A merchant is a natural person (sole proprietorship) or a
commercial company (partnership and capital company) registered
in the Commercial Register.
(2) Commercial activity is an open economic activity performed
by merchants in their name for profit. Commercial activity is one
of the types of entrepreneurial activity.
(3) Economic activities are any systematic, independent
activities for remuneration.
(4) In this Law it may be specified that particular types of
economic activities may only be performed by a merchant. The
status of a merchant may be granted by law also to other
persons.
[14 February 2022]
Section 2. Legal Effect of
Registration
If a merchant is registered in the Commercial Register, an
objection that an economic activity performed using the firm name
registered in the Commercial Register is not a commercial
activity shall not be allowed.
Section 3. Legal Framework for
Commercial Activities
(1) Commercial activities shall be governed by this Law, the
Civil Law, and other laws, and also by the norms of the
international law binding on the Republic of Latvia.
(2) The provisions of the Civil Law shall be applicable to
commercial activities insofar as this Law or other laws governing
commercial activities do not specify otherwise.
(3) The provisions of this Law shall apply to persons who are
not merchants or to economic activities that are not commercial
activities if this Law or another law especially provides for
it.
(4) The provisions of this Law shall not apply to agricultural
production and other trade activities performed by a natural
person and governed by other laws, if the person who performs
them has not been registered in the Commercial Register as a sole
proprietorship.
(5) The provisions of this Law shall be applicable to
commercial companies of significance to national security insofar
as it is not otherwise provided by the National Security Law.
[14 February 2002; 23 March 2017]
Section 4. Restrictions on
Commercial Activities
(1) Restrictions on commercial activities may only be
specified by law or on the basis of law.
(2) Merchants have the right to freely choose the types of
commercial activities that are not prohibited by law.
(3) This Law may specify separate types of commercial
activities for the performance of which a permit (licence) is
necessary or which may be performed by merchants in conformity
with the requirements specified by this Law.
(4) Restrictions on commercial activities for a natural person
may be imposed by:
1) a ruling made within criminal proceedings by which the
person is deprived of the right to perform commercial activities
of all types or a specific type;
2) a ruling made within criminal proceedings or administrative
offence proceedings by which the person is deprived of the right
to hold certain positions.
[14 February 2002; 29 November 2012]
Section 4.1 Restriction
on Commercial Activity Specified for a Natural Person
(1) If a natural person has been deprived of the right to
perform commercial activities of all types or a specific type by
a ruling made within criminal proceedings, the following is
prohibited during the period of prohibition specified in the
relevant ruling:
1) to apply himself or herself for entering in the Commercial
Register as a sole proprietorship and to perform commercial
activities as a sole proprietorship;
2) to be the founder of a commercial company;
3) to become a member, shareholder, stockholder of a
commercial company, except when the shares, stocks or investment
(capital) of the equity capital are inherited;
4) to be the secretary of a partnership or a member of a
partnership with the right of representation;
5) to be a member of the executive board or supervisory board
of a capital company;
6) to participate in taking a decision at the meeting of
shareholders in the case specified in Section 210, Paragraph two
of this Law;
7) to be a procurator, a person with a commercial power of
attorney or a person who is authorised to represent a foreign
merchant in activities related to a branch;
8) to be the liquidator of a commercial company;
9) to give instructions or advice to a sole proprietorship,
member, shareholder or stockholder of a commercial company, a
member of the executive board or supervisory board, a procurator
or a person with a commercial power of attorney, or otherwise
influence them.
(2) The prohibitions specified in Paragraph one of this
Section shall be applicable to a natural person who has been
deprived of the right to perform commercial activities of
specific type only in relation to the type of commercial activity
specified in the relevant ruling. If the legal status of such
person allows the taking of decisions in a commercial company, he
or she is prohibited to take decisions on issues which are
related to the type of commercial activity specified in the
relevant ruling.
(3) A sole proprietorship who has been deprived of the right
to perform commercial activities of all types or specific type
has the obligation to suspend his or her activities for the
period of prohibition specified in the relevant ruling to the
relevant extent or to terminate his or her status of sole
proprietorship with or without the alienation of the
undertaking.
(4) The sole shareholder or stockholder of a capital company
who has been deprived of the right to perform commercial
activities of all types or a specific type has the obligation to
suspend activities of the company for the period of prohibition
specified in the relevant ruling to the relevant extent,
terminate activities of the company, or alienate the equity
capital shares or stocks thereof.
(5) If a natural person has been deprived of the right to
perform commercial activities of all types or specific type, he
or she has the obligation to inform the merchant thereof
immediately after entering into effect of the relevant ruling,
but if the merchant is a commercial company - also the members,
shareholders or stockholders thereof.
(6) Application of this Section is without prejudice to the
provisions of Section 5 of this Law.
[29 November 2012; 2 May 2013; 16 June 2022]
Section 4.2 Restrictions
on Holding Positions Specified for a Natural Person
(1) If a natural person has been deprived of the right to hold
certain positions in a commercial company and its administrative
bodies by a ruling made within criminal proceedings or
administrative offence proceedings, the relevant natural person
is not entitled to be:
1) the secretary of a partnership;
2) a member entitled to represent a partnership;
3) a member of the executive board of a capital company;
4) a member of the supervisory board of a capital company;
5) a procurator;
6) a person with a commercial power of attorney;
7) the person who is authorised to represent a foreign
merchant in activities related to a branch;
8) the liquidator of a commercial company;
9) [11 May 2023 / See Paragraph 82 of Transitional
Provisions];
10) an auditor.
(11) If a court has, based on a ruling made within
the scope of civil proceedings, restricted the capacity to act of
a natural person of legal age (due to disorders of mental nature
or other health disorders, or due to dissolute or wasteful life
of the person), the relevant natural person shall not be entitled
to hold the positions referred to in Paragraph one, Clauses 3-10
of this Section.
(2) If a natural person has been deprived of the right to hold
certain positions or if a court has restricted his or her
capacity to act, such person has the obligation to inform the
merchant thereof immediately after entering into effect of the
relevant ruling, but if the merchant is a commercial company -
also the members, shareholders or stockholders of the relevant
commercial company. If the capacity to act has been restricted
and trusteeship has been established for a natural person, the
obligation of informing shall rely on his or her trustee who
provides information without delay as soon as he or she has
learned or he or she should have learned that the relevant person
holds a certain position.
(3) Application of this Section is without prejudice to the
provisions of Section 5 of this Law.
[29 November 2012; 2 May 2013; 16 January 2014; 11 May 2023
/ See Paragraph 82 of Transitional Provisions]
Section 4.3 Restrictions
on Commercial Activities Imposed on a Natural Person in the
European Union Member States, Iceland, Kingdom of Norway, and
Principality of Liechtenstein
If the restriction on commercial activities has been imposed
on a natural person in a European Union Member State, Iceland,
the Kingdom of Norway, or the Principality of Liechtenstein
(hereinafter - the Member State), the relevant natural person is
not entitled to hold the positions referred to in Section
4.2, Paragraph one of this Law.
[11 May 2023 / Section shall come into force on 1
August 2023. See Paragraph 83 of Transitional
Provisions]
Section 5. Merchant Status and
Public Law
The provisions of public law which prohibit the performance of
specific types of commercial activities or restrict the
performance thereof, or also provide for certain preconditions
for the performance of such type of commercial activities shall
not influence the application of the provisions of private law
which have arisen, have been amended or have ceased on the basis
of this Law.
[29 November 2012]
Division
II
COMMERCIAL REGISTER
Section 6. Keeping of Commercial
Register
(1) Information as specified by law shall be entered and the
documents specified by law shall be stored in the Commercial
Register on the merchant and commercial activities.
(2) The Commercial Register shall be kept by a State
institution authorised by law to do so (hereinafter - the
Commercial Register Office).
[22 April 2004]
Section 7. Transparency of
Commercial Register
(1) Everyone has a right to become acquainted with the records
of the Commercial Register and the documents submitted to the
Commercial Register Office.
(2) After submission of a written request, everyone has the
right to receive information on the records of the Commercial
Register and extracts and copies of documents present in the
registration file of the merchant in printed or electronic form.
The accuracy of the extract or copy of the document shall be
certified in accordance with the procedures specified in laws and
regulations, unless the recipient refuses such certification.
When issuing a copy of a printed document in electronic form, the
accuracy thereof shall be certified in accordance with the
procedures specified in the Electronic Documents Law. A copy of
the document in printed form shall be certified in accordance
with the procedures specified in laws and regulations, if the
recipient thereof has clearly requested such certification.
(3) Pursuant to a request of the recipient, an official of the
Commercial Register Office shall issue a statement that the
specified record in the Commercial Register has not been amended
or also on the fact that a specific record has not been made in
the Commercial Register.
(4) After submission of a written request, everyone has the
right to receive a notice from the Commercial Register Office on
each application received in the registration file of the
relevant merchant. The Commercial Register Office shall send the
notice on the day when the application was received. The nature
of the application and the date of receipt thereof shall be
indicated in the notice. The way and procedures for sending the
notice shall be determined by the Cabinet.
[24 April 2008; 2 May 2013; 6 November 2013]
Section 8. Contents of the Records
in the Commercial Register
(1) The following information shall be entered in the
Commercial Register on a sole proprietorship:
1) firm name;
2) given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document) of
the merchant;
3) legal address;
4) branch firm name, if it differs from the firm name of the
merchant, and its legal address.
(2) The following information shall be entered in the
Commercial Register on a partnership:
1) firm name;
2) type of partnership;
3) amount of contribution by each limited partner and the
total amount of limited partner contributions;
4) given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the state and authority, which issued the document) of
the members and limited partners personally liable for the
partnership, but for legal persons - name, registration number
and legal address;
5) the right of members of the partnership to represent the
partnership individually or jointly, indicating the given name,
surname, personal identity number (if the person does not have a
personal identity number - the date of birth, the number and date
of issue of a personal identification document, the country and
authority which issued the document) of each member of the
partnership authorised for representation, but for legal persons
- firm name, registration number and legal address;
6) legal address;
7) if the partnership has been established for a specific
period or for the achievement of a specific objective - the
period for which it was established or the objective;
8) branch firm name, if it differs from the firm name of the
partnership, and its legal address.
(3) The following information shall be entered in the
Commercial Register on a capital company:
1) firm name;
2) type of capital company;
3) given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document)
and position held of the members of the executive board, members
of the supervisory board (if the capital company has established
a supervisory board) of the capital company;
4) the right of the members of the executive board to
represent the capital company individually or jointly;
5) the amount of the paid-up equity capital;
51) the amount of conditional equity capital of a
joint-stock company;
6) [14 February 2002];
7) legal address;
8) if the capital company has been established for a specific
period - the period for which it has been established;
9) branch firm name, if it differs from the firm name of the
capital company, and its legal address.
(4) The following information shall be entered in the
Commercial Register on a branch of a foreign merchant, except for
that referred to in Paragraph 4.1 of this Section:
1) branch firm name, if it differs from the firm name of the
foreign merchant, and the firm name of the foreign merchant;
2) legal address of the branch and the location of the foreign
merchant (legal address);
3) the register in which the foreign merchant is registered,
and registration number, if the law of the country of the
location of the foreign merchant provides for the registration of
a merchant in a register;
4) the type of foreign merchant;
5) amount of equity capital of the foreign merchant,
separately indicating the amount of the subscribed and paid-up
equity capital, if the foreign merchant is a capital company and
this information is entered in the register of the country in
which the foreign merchant is registered.
(41) The following information shall be entered in
the Commercial Register on a branch of a capital company of the
Member State:
1) the branch firm name if it differs from the firm name of
the capital company of the Member State, and the firm name of the
capital company of the Member State;
2) the legal address of the branch;
3) the given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document)
and scope of authorisation of those persons who are authorised to
represent the capital company of the Member State in activities
related to a branch.
(5) In addition to the information specified in this Section,
the following information shall be entered in the Commercial
Register:
1) the given name, surname, and personal identity number of
the procurator (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document), and also a reference to a joint procuration
or branch procuration if such has been issued, a reference to the
granting of the rights referred to in Section 34, Paragraph two
of this Law if such have been granted, and also the right of the
procurator to represent the commercial company individually or
jointly with one or several members of the executive board or
members of the partnership;
2) the given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document)
and scope of authorisation of those persons who are authorised to
represent a merchant (foreign merchant) in activities related to
a branch;
3) information on the reorganisation of a merchant (foreign
merchant), indicating the firm name and registration number of
each company involved in the reorganisation process, the type of
reorganisation and, in case of cross-border reorganisation, also
the type of company of another Member State and the Commercial
Register Office in which the company of another Member State has
been registered;
4) information on the appointment of an administrator of
insolvency proceedings (hereinafter - the administrator),
indicating the given name, surname, personal identity number (if
the person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document),
information on the implementation and termination of legal
protection proceedings of a merchant (foreign merchant),
information on the declaration and termination of the insolvency
proceedings of a merchant (foreign merchant), information on the
completion of bankruptcy proceedings of a merchant (foreign
merchant);
41) information on the suspension or renewal of the
activities of a merchant, indicating grounds for the suspension
or renewal of activities;
5) information on the termination and liquidation of the
activities of a merchant (foreign merchant) by indicating grounds
for the termination of activities, as well as on the appointment
of a liquidator by indicating the given name, surname, personal
identity number (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document) thereof, but if the liquidator of a foreign
merchant is a legal person - the firm name, registration number
and legal address;
6) information on the entry into a group of companies
contract, amendment or termination thereof by indicating the
dominant and dependent company, registration number and date of
entry into the contract;
7) the given name, surname, personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document) of
the guardian of a sole proprietorship or a member of a
partnership with the right of representation;
71) information on the establishment of trusteeship
for a sole proprietorship or a member of a partnership with the
right of representation, if a court has restricted the capacity
to act of the relevant person;
72) the name, registration number, and legal
address of the central securities depository in which
dematerialised stocks of a joint-stock company have been
recorded;
8) date of making each entry.
(6) Other information shall be entered in the Commercial
Register, if such is explicitly provided for by law.
(7) When registering a merchant, a branch thereof in Latvia,
or a branch of a foreign merchant and a capital company of a
Member State in Latvia in the Commercial Register, an individual
registration number shall be assigned thereto.
[14 February 2002; 22 April 2004; 16 March 2006; 24 April
2008; 15 April 2010; 16 June 2011; 29 November 2012; 2 May 2013;
16 January 2014; 15 June 2017; 6 July 2021; 11 May 2023; 16 June
2022]
Section 9. Documents to be Submitted
to the Commercial Register Office and their Preservation
(1) Documents which justify the making of an entry in the
Commercial Register, and other documents specified by law shall
be submitted to the Commercial Register Office. These documents
shall be submitted in printed or electronic form. The original of
the relevant document or an appropriately certified copy thereof
shall be submitted to the Commercial Register Office. If the law
provides that the signature of a person on the document
(application, document to be appended to the application or
another document) must be notarised, such requirement shall be
deemed as complied with if the signature has been certified by a
sworn notary or, if the document has been drawn up in electronic
form, it has been signed with a secure electronic signature. If
the law provides that the signature of a person on the document
(application, document to be appended to the application or
another document) must be notarised, an authorisation for another
person to sign such document shall be notarised. When certifying
a signature, a sworn notary shall examine the capacity to act of
the person and the scope of powers of the authorised person or
representative. If the document has been drawn up in electronic
form and signed with a secure electronic signature, an official
of the Commercial Register Office shall examine the capacity to
act of the person on the basis of the data of the Population
Register, as well as the scope of powers of the authorised person
or representative.
(11) Public documents issued in a foreign country
shall be legalised in accordance with the procedures specified in
international agreements, and a notarised translation in the
Latvian language shall be appended thereto. A certified
translation in the Latvian language according to the laws and
regulations determining the procedures by which translations of
documents in the official language shall be certified shall be
appended to private documents in a foreign language. A
translation into a foreign language may be appended to documents
to be submitted to the Commercial Register Office in the Latvian
language. If an inconsistency is determined between a document
submitted in the Latvian language and a translation thereof in a
foreign language, a merchant or a person in the interests of whom
this translation has been submitted may not use it against a
third party. The third party may, in respect of the merchant or
the person in the interests of whom this translation has been
submitted, refer to this translation, except when the third party
knew the content of the document in the Latvian language.
(2) After making amendments to the documents of incorporation
of a capital company (memorandum of association, articles of
association), the text of the amendments and also the full text
of the document as amended must be submitted to the Commercial
Register.
(3) The documents submitted to the Commercial Register Office
shall be kept in the relevant Commercial Register file of the
merchant. Annual statement and documents to be appended thereto
shall be kept in the file only in electronic form.
(31) The Commercial Register Office shall be
submitted an extract from the notarial deed book of the minutes
or decision of the meeting of shareholders (stockholders) of a
capital company, if it has been specified in the articles of
association of the capital company that the progress of the
meeting of shareholders (stockholders) shall be certified by a
sworn notary.
(4) A person may indicate such address in an application to
the Commercial Register Office where he or she may be reached. If
the person does not have a declared or registered place of
residence or an indicated address in a foreign country in
accordance with the data of the Population Register, the person
shall indicate such address in the application to the Commercial
Register Office where he or she may be reached. The Commercial
Register Office shall provide information on the address of the
person indicated in the application upon a justified request of
the recipient.
[16 March 2006; 24 April 2008; 15 April 2010; 16 June 2011;
2 May 2013; 15 June 2017; 17 December 2020]
Section 10. Making of an Entry in
the Commercial Register and Appending of Documents to the
Registration File
(1) Entries in the Commercial Register shall be made on the
basis of an application of an interested person or a court
ruling.
(11) The information referred to in Section 8 of
this Law shall be indicated in an application. When applying for
changes in the information to be entered in the Commercial
Register, the changes made in accordance with Section 8 of this
Law shall be indicated in the application.
(2) The signature of a person shall be notarised:
1) on the application:
a) for the registration of a merchant in the Commercial
Register;
b) for the change of a member of a partnership with the right
of representation or changes in the right of representation;
c) for the issuing or withdrawal of procuration or changes in
the scope thereof;
d) for the appointment or removal of the liquidator of a
partnership;
e) or all applications submitted, if it has been provided for
in the articles of association of the capital company or in an
application previously submitted to the Commercial Register
Office and signed by all members;
2) on the following documents to be appended to the
application:
a) on the minutes of the meeting of shareholders of a limited
liability company or the supervisory board of a joint-stock
company or a derivative thereof, if the decision on the election
or removal of a member of the executive board of the relevant
capital company has been taken;
b) on the minutes of the meeting of stockholders of a
joint-stock company or a derivative thereof, if the decision on
the election or removal of a member of the supervisory board of
the relevant joint-stock company has been taken;
c) on the minutes of the meeting of shareholders
(stockholders) of a capital company or a derivative thereof and
in the new wording of the full text of the articles of
association of the capital company, if a decision on amendments
to the articles of association of the capital company has been
taken;
d) on the minutes of the meeting of shareholders
(stockholders) of a capital company or a derivative thereof, if
the decision on the election or removal of the liquidator of the
capital company has been taken;
e) on the division of the register of shareholders
(stockholders) of a capital company;
f) on the consent of a person to hold the position of a member
of the executive board of a capital company, except when the
consent of the member of the executive board has been included in
the application to the Commercial Register Office, and his or her
signature on the application has been notarised;
g) on the consent of a person to hold the position of the
liquidator of a commercial company;
h) on all the minutes of the meetings of the supervisory board
of a joint-stock company or derivatives thereof, if it has been
provided for in the articles of association of the joint-stock
company;
i) on all the minutes of the meeting of shareholders
(stockholders) of a capital company, if it has been provided for
in the articles of association of the capital company.
(3) The decision to make an entry in the Commercial Register,
refuse to make an entry, or to postpone the making of an entry
shall be taken within three days (excluding holidays and public
holidays) from the day of receipt of the application by an
official of the Commercial Register Office. Within the same
period, an official of the Commercial Register Office shall take
the decision to make an entry in the Commercial Register on the
basis of a court ruling.
(4) The decision to refuse to make an entry in the Commercial
Register or to postpone the making of an entry may only be taken
in such case if the application or the documents attached thereto
does not conform to the provisions of the law. The decision must
be substantiated. The time limit for the elimination of the
deficiencies shall be indicated in the decision to postpone the
making of an entry.
(5) An official of the Commercial Register shall send the
decision referred to in Paragraph three of this Section to the
submitter of the application within three days (excluding
holidays and public holidays) from the day when the decision was
taken.
(6) The submitter of the application has the right to appeal
the decision of an official of the Commercial Register Office in
accordance with the procedures specified by law.
(7) An entry in the Commercial Register shall be made and
documents shall be appended to the registration file on the same
day when the decision to make an entry or to append documents to
the registration file was taken.
[22 April 2004; 16 March 2006; 24 April 2008; 2 May 2013;
15 June 2017; 16 June 2022]
Section 11. Promulgation of
Commercial Register Entries
(1) All entries of the Commercial Register shall be
promulgated, ensuring the initial public availability thereof
online by the Commercial Register Office. The documents attached
to the registration file shall be promulgated in the same
way.
(2) An entry shall be regarded as promulgated on the next day
after making thereof. Documents shall be regarded as promulgated
on the next day after their attachment to the registration
file.
(3) When promulgating entries of the Commercial Register and
documents attached to the registration file, the following
information shall be indicated additionally:
1) the date of making the entry of the Commercial
Register;
2) the date when the document has been attached to the
registration file.
[6 July 2021 / Paragraph three shall come into force
on 1 July 2023. See Paragraph 61 of Transitional
Provisions]
Section 12. Public Access to the
Commercial Register
(1) Entries in the Commercial Register shall be in effect as
to third parties from the date of their promulgation. This
provision shall not apply to legal activities which are performed
within 15 days after the promulgation of the entry, insofar as
the third party can prove that he or she did not know or could
not have known the relevant information.
(2) If the information to be entered in the Commercial
Register has not been entered or has been entered but not
promulgated, the person in whose interests such information
should have been entered cannot use it against a third party,
except when the third party knew the respective information.
(3) If the promulgated information to be entered in the
Commercial Register has been entered incorrectly, a third party
may, in relation to the person in whose interests such
information should have been entered, refer to the information
which has been entered, except when the third party knew that the
information entered in the Commercial Register does not
correspond to the actual legal status.
(4) If a merchant is sent information, documents or other
correspondence to their legal address as entered in the
Commercial Register, it shall be deemed that the merchant has
received such documents, information or other correspondence, if
the sender proves documentarily that such sending has been
made.
[14 February 2002; 6 July 2021]
Section 13. Registration
Certificate
[6 July 2021]
Section 14. Deletion of a Merchant
from the Commercial Register
A merchant shall be deleted from the Commercial Register on
the basis of:
1) an application of a sole proprietorship;
2) an application of the liquidator of a commercial
company;
3) an application of the administrator in a case of insolvency
proceedings;
4) an application of a commercial company for making an entry
of re-organisation;
5) a court ruling.
[24 April 2008]
Section 15. State Fee and Charge for
the Service Provided by the Commercial Register Office
(1) A State fee shall be paid for making entries in the
Commercial Register and the attaching of documents to the
registration file. The amount of the State fee may not exceed the
administrative expenses for making the relevant entry and the
attaching of documents to the registration file. The amount,
payment procedures and reliefs of the State fee shall be
determined by the Cabinet.
(2) The fee for the service indicated in the pricelist of the
paid services of the Commercial Register Office shall be paid for
the issuance of an extract from the Commercial Register and an
extract or copy of a document from the Commercial Register file,
and also for the issuance of a statement and for other services
provided by the Commercial Register Office.
[6 November 2013; 17 December 2020; 6 July 2021 /
Amendment regarding the new wording of the second sentence of
Paragraph one shall be applicable from 1 September 2021.
See Paragraph 65 of Transitional Provisions]
Section 16. Term for the Submission
of Information
Information on the basis of which new entries are to be made
in the Commercial Register and also the documents specified by
law to be submitted shall be submitted to the Commercial Register
Office within 14 days from the day when the relevant decision was
taken unless otherwise specified in this Law.
[14 February 2002]
Section 17. Details of a
Merchant
(1) The following details shall be included in the business
letters, invoices, and other documents of a merchant in printed
or electronic form, as well as on the website of the
merchant:
1) the firm name of the merchant;
2) the registration number of the merchant in the Commercial
Register;
3) the legal address of the merchant;
4) in relevant cases - information on whether the merchant is
in the process of liquidation or insolvency.
(2) If a merchant has opened a branch, then the following
shall be included in its documents in printed or electronic form
in addition to the information referred to in Paragraph one of
this Section:
1) the firm name of the branch if it differs from the firm
name of the merchant;
2) the registration number of the branch in the Commercial
Register;
3) the legal address of the branch.
(3) [16 June 2022]
[24 April 2008; 16 June 2022]
Section 17.1 Disclosure
Obligation
[9 November 2017 / See Paragraph 57 of Transitional
Provisions]
Division
III
UNDERTAKINGS, BRANCHES, AND REPRESENTATIVE OFFICES
[6 July 2021]
Section 18. Definition of an
Undertaking
An undertaking is an organisational economic unit. An
undertaking includes both tangible and intangible things
belonging to a merchant and also other economic benefits (values)
which are used by the merchant to perform commercial
activities.
[14 February 2002]
Section 19. Trade Secrets
[6 July 2021]
Section 20. Transfer of an
Undertaking
(1) If an undertaking or an independent part thereof is
transferred into the ownership or use of another person, the
acquirer of the undertaking shall be liable for all the
obligations of the undertaking or its independent part. However,
in respect of those obligations which have arisen prior to the
transfer of the undertaking or its independent part into the
ownership or use of another person, and the time limit or
conditions for the fulfilment of which has come into effect
within five years after the transfer of the undertaking, the
transferor of the undertaking and the acquirer of the undertaking
shall be jointly liable.
(2) In the case of the transfer of an undertaking or an
independent part thereof, claims and other rights included in the
undertaking or its part shall be transferred to the acquirer of
the undertaking.
(3) An agreement which is in contradiction to the provisions
of this Section shall be void as to third parties.
[14 February 2002; 22 April 2004]
Section 21. Transfer of an
Undertaking of a Sole Proprietorship to a Partnership
(1) If an undertaking of a sole proprietorship is transferred
to a partnership which is founded by this sole proprietorship and
another person, the partnership thus founded shall be liable for
all the obligations of the sole proprietorship included in the
undertaking.
(2) In the case of the transfer of an undertaking, claims and
other rights in relation to debtors included in the undertaking
shall be transferred to the partnership thus founded.
(3) An agreement which is in contradiction to the provisions
of this Section shall be void as to third parties.
Section 22. Definition of a
Branch
A branch is an organisationally independent part of an
undertaking which is territorially or otherwise separated from
the principle undertaking and at the location of which commercial
activities are systematically performed on behalf of the
merchant.
[14 February 2002]
Section 23. Registration of a Branch
in the Commercial Register
(1) The opening of a branch shall be entered in the Commercial
Register based on an application of a merchant.
(2) [15 June 2017]
(3) The application shall specify the legal address of a
branch, including the cadastral designation of the immovable
property object (building, residential property or premises), and
confirm that the branch is reachable and it has legal grounds to
be at the indicated legal address.
[16 June 2011; 15 June 2017; 6 July 2021]
Section 24. Deletion of a Branch
from the Commercial Register
A branch shall be deleted from the Commercial Register:
1) on the basis of an application of the merchant for the
closure of the branch;
2) if the merchant is deleted from the Commercial
Register.
Section 24.1 Registration
of Information on a Branch of a Commercial Company in a Member
State
(1) Information on the registration of a branch of a
commercial company in a Member State, changes in the information
on the branch and deletion of the branch from the register of the
Member State shall be registered by the Commercial Register
Office on the basis of a notice which has been received in the
system of interconnection of registers from the register
institution of the Member State.
(2) In respect of a branch of a commercial company in a Member
State, the Commercial Register Office shall register the
following information:
1) firm name, if different from the firm name of the merchant,
and additional firm name if there is more than one firm name of
the branch;
2) legal address;
3) registration number;
4) date of registration;
5) date of entry into effect of the branch registration (if
any);
6) register in which an entry on the branch of the merchant
has been made.
[6 July 2021]
Section 25. Branches of Foreign
Merchants
(1) The provisions of this Law shall be applied to branches of
foreign merchants, insofar as it is not otherwise specified in
this Section.
(2) Opening a branch of a foreign merchant shall be applied
for entering in the Commercial Register on the basis of the
application of the merchant.
(3) The following documents shall be appended to the
application for the entry of a branch of a foreign merchant in
the Commercial Register:
1) a document which certifies the registration of the merchant
in the relevant country or a notarised copy of such document if
the law of the country where the foreign merchant is located
provides for the registration of the merchant in a register;
2) the permit to open a branch if such is provided for by
law;
3) a notarised copy of the articles of association, memorandum
of association or a document equivalent to such of the
merchant;
4) a document which certifies the authorisation of a person to
represent the foreign merchant in all activities associated with
the branch, and the scope of such powers;
5) [6 July 2021].
(31) The application shall specify the legal
address of a branch of a foreign merchant, including the
cadastral designation of the immovable property object (building,
residential property or premises), and confirm that the branch of
the foreign merchant is reachable and it has legal basis to be in
the specified legal address.
(4) The person who is authorised to represent a foreign
merchant in activities related to a branch, a foreign merchant or
the lawful representatives of such merchant shall submit an
application to the Commercial Register Office for:
1) the termination of the activities of the merchant, the
initiation and completion of legal protection or insolvency
proceedings, tendering procedures or proceedings equivalent
thereto;
2) the liquidation of the merchant, as well as re-organisation
if the foreign merchant is a company;
3) the appointment of the administrator or liquidator,
indicating the given name, surname of the administrator
(liquidator), the address where he or she can be reached, and the
scope of powers;
4) the deletion of the branch from the Commercial
Register.
(41) [6 July 2021]
(5) The persons referred to in Paragraph four of this Section
shall submit an application to the Commercial Register Office for
any changes in the composition of such persons and the scope of
their powers.
(6) The annual accounts of a foreign merchant shall be
submitted to the Commercial Register Office if the law of the
country where the foreign merchant is located provides for the
submission of the annual statements to the register of the
country where the merchant is located.
(7) All documents to be submitted to the Commercial Register
Office shall have attached notarised translations in the Latvian
language.
(8) [6 July 2021]
[22 April 2004; 16 March 2006; 24 April 2008; 16 June 2011;
15 June 2017; 6 July 2021; 16 June 2022]
Section 25.1 Branches of
Capital Companies of Member States
(1) The provisions of this Law shall be applied to branches of
capital companies of Member States, insofar as it is not
specified otherwise in this Section.
(2) Opening a branch of a capital company of a Member State,
changes in the information on the branch and deletion of the
branch from the Commercial Register shall be applied for entry in
the Commercial Register on the basis of the application of the
capital company of the Member State.
(3) The application for the entry of a branch of a capital
company of the Member State in the Commercial Register shall be
accompanied by the documents referred to in Section 25, Paragraph
three, Clauses 2 and 4 of this Law. The application shall specify
the legal address of a branch of a merchant of a Member State,
including the cadastral designation of the immovable property
object (building, residential property or premises), and confirm
that the branch of the merchant of the Member State is reachable
and it has legal basis to be in the specified legal address.
(4) The annual statement referred to Section 25, Paragraph six
of this Law need not be submitted if it is available at the
register institution of the relevant Member State.
(5) If information on the deletion of a capital company from
the relevant register is received in the system of
interconnection of registers from the register institution of the
Member State which keeps the register where the capital company
is entered, the Commercial Register Office shall immediately make
an entry in the Commercial Register on the deletion of the branch
of the capital company.
[6 July 2021]
Section 25.2
Representative Offices of Foreign Merchants
A merchant of a foreign country, including a Member State, has
the right to open representative offices in Latvia. A
representative office is not a legal person, and it does not have
the right to conduct commercial activities in Latvia.
[6 July 2021]
Division
IV
FIRM NAMES
Section 26. Definition of a Firm
Name
(1) A firm name is the name of a merchant entered in the
Commercial Register which the merchant uses in commercial
activities when concluding transactions and signing.
(2) In a narrower sense, the firm name shall be understood as
a designation without reference to the type of merchant.
[14 February 2002]
Section 27. Reference to the Type of
Merchant
(1) The firm name of a sole proprietorship shall contain the
reference "individuālais komersants" [sole proprietorship] or its
abbreviation "IK".
(2) The firm name of a general partnership shall contain a
reference "pilnsabiedrība" [general partnership] or its
abbreviation "PS". The firm name of a limited partnership shall
contain a reference "komandītsabiedrība" [limited partnership] or
its abbreviation "KS".
(3) The firm name of a limited liability company shall contain
a reference "sabiedrība ar ierobežotu atbildību" [limited
liability company] or its abbreviation "SIA". The firm name of a
joint-stock company shall contain a reference "akciju sabiedrība"
[joint-stock company] or its abbreviation "AS".
(4) The references to the type of merchant shall be placed at
the beginning or end of the firm name.
[14 February 2002]
Section 28. Firm Name
Distinctiveness
The firm name of a merchant (Paragraph two of Section 26)
shall clearly and specifically differ from the firm names or
names which have already been entered or which have been applied
for entering in the Commercial Register or other registers
maintained by the Commercial Register Office.
[14 February 2002; 15 April 2010 / Amendment
regarding the firm names or names which have already been entered
or which have been applied for entering in other registers
maintained by the Commercial Register Office shall come into
force on 1 December 2010. See Paragraph 18 of Transitional
Provisions]
Section 29. Restrictions on the
Choice of the Firm Name
(1) A firm name may not contain misleading information on
important circumstances within the scope of commercial rights,
especially on the type of merchant or commercial activities or
also on the scope of commercial activities.
(2) A firm name may not be in contradiction with good
morals.
(3) A firm name may not include the words "Latvijas
Republika" [the Republic of Latvia] and their translation
into a foreign language.
(4) If a firm name contains the name of an administrative
territory or populated area, the firm name may not coincide with
the name of the relevant administrative territory or populated
area, except for the name of a homestead.
(5) A firm name may not include names of the State and local
government authorities (institutions), and also words "valsts"
[state] or "pašvaldība" [local government].
(6) The use of trademarks or parts thereof in a firm name
shall be governed by the laws and regulations regarding
trademarks.
(7) Only letters of the Latvian or Latin alphabet may be
included in the writing of a firm name.
[22 April 2004]
Section 30. Inclusion of Personal
Names in Firm Names and the Continued Use of Firm Names
(1) The firm name of a sole proprietorship may contain the
given name or surname of the merchant. If the given name or
surname of the sole proprietorship changes, he or she may also
continue to use the previous firm name.
(2) The firm name of a general partnership may not contain the
given name, surname or name of such persons who are not its
members. The firm name of a limited partnership may not contain
the given name, surname or name of such persons who are not its
general partners. If the given name or surname (name) of its
personally liable member the given name or surname (name) of
which is included in the firm name of the partnership changes,
the partnership may continue to use the current firm name.
(3) If a new personally liable member joins an existing
partnership or one of the personally liable members leaves the
partnership, the partnership may continue to use the current firm
name. If the member whose given name, surname (name) is included
in the firm name leaves the partnership, the continued use of the
current firm name shall require the written consent of such
member or in the case of his or her death - of the heirs.
(4) Upon the acquisition of an existing undertaking, the
acquirer may continue to use the current firm name which includes
the given name or surname of the previous owner, if the previous
owner or - in the case of the death of the owner - his or her
heirs have consented in writing to the continued use of the firm
name.
(5) The provisions of Paragraph four of this Section shall be
applied in cases when an undertaking is acquired on the basis of
usufructuary rights, a lease or similar legal relationship.
[14 February 2002; 22 April 2004]
Section 31. Alienation of Firm
Names
A firm name may only be alienated together with the relevant
undertaking.
Section 32. Firm Names of
Branches
A branch of a merchant may have its own firm name which shall
contain the firm name of the merchant, the name of the branch or
a reference to its location and the word "filiāle" [branch].
Section 33. Protection of Firm
Names
A merchant whose rights are infringed in relation to the use
of its firm name, may request from the infringer to terminate the
use of the firm name, as well as to compensate the merchant for
the losses incurred by the illegal use of the firm name.
Division
V
PROCURATION AND ORDINARY COMMERCIAL POWER OF ATTORNEY
Section 34. Procuration
(1) Procuration is a commercial power of attorney which grants
the procurator the right to conclude transactions and to perform
other legal activities associated with commercial activities on
behalf of a merchant, including all procedural activities in the
course of legal proceedings (bringing an action, settlement,
appeal of a court ruling, etc.).
(2) A procurator may alienate or pledge an immovable property
or encumber it with rights in rem only if such rights have been
specially granted to him or her.
(3) It may be determined in the articles of association of a
capital company that the procurator shall represent the capital
company together with one or several members of the executive
board. It may be determined in a partnership agreement that the
procurator shall represent the partnership together with one or
several members of the partnership.
[22 April 2004]
Section 35. Issuance of a
Procuration and Restrictions on a Procurator
(1) Only a merchant or a legal representative of such merchant
may issue a procuration, moreover with a specific expression of
intent.
(2) A procuration may be issued simultaneously to several
persons. On the basis of such a procuration (joint procuration),
the joint procurators have the right to represent the merchant
only jointly.
(3) A procurator does not have the right to transfer the
procuration to another person.
(4) A person who may not be a member of the executive board of
a capital company in accordance with the restrictions specified
in the first sentence of Section 221, Paragraph four and Section
304, Paragraph three of this Law may not be a procurator.
[29 November 2012]
Section 36. Restrictions on the
Scope of a Procuration
(1) Restrictions on the scope of a procuration shall be void
as to third parties.
(2) The provisions of Paragraph one of this Section shall
especially apply to such restrictions of the scope of a
procuration as a result of which the procuration may be used
only:
1) in relation to specific transactions, specific types of
transactions or their scope;
2) when certain circumstances exist;
3) for a specific period or in a specific area.
(3) The restriction of the scope of a procuration in relation
to one of several branches of a merchant's undertaking (a branch
procuration) shall be in effect as to third parties only if such
branches have different firm names entered in the Commercial
Register.
Section 37. Signature of a
Procurator
A procurator shall sign adding to the firm name of the
merchant his or her signature and an indication of the existence
of a procuration (procurator, p.p., per procura).
Section 38. Application for Entering
in the Commercial Register the Issuance of a Procuration, Changes
in the Representation Rights of a Procurator and Termination of a
Procuration
(1) A merchant shall apply the issuance of a procuration for
entering in the Commercial Register.
(2) If a joint procuration is issued or if the procurator has
been granted the right to alienate or pledge an immovable
property or to encumber it with rights in rem in the procuration,
the merchant shall especially indicate this in the application
for entering the procuration in the Commercial Register.
(3) Changes in the representation rights of a procurator and
the termination of a procuration shall be applied by the merchant
for entering in the Commercial Register.
[14 February 2002; 16 March 2006; 15 April 2010; 15 June
2017]
Section 39. Termination of a
Procuration
(1) A merchant has the right to unilaterally revoke a
procuration at any time irrespective of the legal relationship
upon which the procuration was issued. The revocation of a
procuration shall not influence the rights of a procurator to
receive the contracted remuneration.
(2) After the death of a sole proprietorship, the procuration
shall remain in effect.
(3) A procuration shall terminate upon the death of the
procurator.
[14 February 2002]
Section 40. Ordinary Commercial
Power of Attorney
(1) If a merchant authorises some other person to perform
commercial activities, conclude specific types of transactions
related to the commercial activities performed by the merchant or
to conclude separate transactions related to the commercial
activities performed by the merchant in his or her name without
issuing a procuration, such a power of attorney (an ordinary
commercial power of attorney) shall relate to all lawful
activities which are usually directed to the performance of such
commercial activities or the concluding of such transactions.
(2) A person with a commercial power of attorney may alienate
or pledge an immovable property or encumber it with rights in
rem, undertake commitments under bills of exchange, take loans or
represent the merchant in court only if such rights have been
especially granted to them.
(3) Any other restrictions on the authorisation granted to a
person with a commercial power of attorney shall be in effect as
to third parties only if they were aware or should have been
aware of such restrictions.
Section 41. Representatives
Authorised to Conclude Transactions
(1) The provisions of Section 40 of this Law shall also be
applicable to those persons with a commercial power of attorney
who are commercial agents or who, as employees of a merchant,
have been entrusted to conclude transactions in the name of the
principal outside its undertaking.
(2) The power of attorney issued to the persons with a
commercial power of attorney referred to in Paragraph one of this
Section does not give them the right to amend the concluded
transactions.
(3) The persons with a commercial power of attorney referred
to in Paragraph one of this Section:
1) may receive payments if they are authorised to do it;
2) shall be considered as authorised to accept notices on the
deficiencies in goods, the supply of goods and other similar
notices with the assistance of which a third party exercises or
keeps their rights in relation to the improper fulfilment of
commitments, as well as exercise the right to the securing of
evidence belonging to the principal.
Section 42. Employees of a Merchant
at the Place of Selling the Goods or Provision of Services
Employees of a merchant who work in a place where goods are
sold or services are provided shall be considered to be
authorised to sell such goods or provide such services and to
perform other legal activities associated with such which are
usually performed at such places.
Section 43. Signature of a Person
with a Commercial Power of Attorney
A person with a commercial power of attorney shall sign,
adding to the firm name of the merchant an addition which
indicates the existence of a power of attorney. A person with a
commercial power of attorney may not add to his or her signature
additions which may create a misleading impression regarding the
existence of a procuration.
Section 44. Further Transfer of a
Commercial Power of Attorney
A person with a commercial power of attorney may transfer the
power of attorney granted to him or her further to another person
only if such rights have been specially granted to him or
her.
Division
VI
COMMERCIAL AGENT
Section 45. Definition of a
Commercial Agent
A commercial agent is a merchant who has been authorised to
permanently conclude transactions with third parties in the name
and to the benefit of another person (principal) or also to
prepare transactions for conclusion.
Section 46. Form of Commercial
Agency Contract
A commercial agency contract shall be concluded in
writing.
Section 47. Obligations of a
Commercial Agent
(1) A commercial agent shall, by taking into account the
interests of the principal, take care of the conclusion of
transactions or their preparation for conclusion.
(2) A commercial agent shall transfer to the principal all the
necessary information and documents. A commercial agent has a
special obligation to inform the principal without delay about of
the conclusion of each transaction or its preparation for
conclusion.
(3) A commercial agent shall fulfil his or her obligations
with the due care of a diligent merchant and comply with the
reasonable instructions of the principal.
(4) An arrangements which is contrary to the provisions of
this Section shall be void.
Section 48. Obligations of a
Principal
(1) The principal shall transfer to the commercial agent
documents (samples, drawings, price lists, advertising brochures,
transaction regulations and others) which are necessary for the
commercial agent to fulfil his or her obligations.
(2) The principal has a special obligation to notify a
commercial agent without delay of:
1) his or her consent to such transaction which the commercial
agent has prepared for conclusion, or refusal to conclude such a
transaction;
2) the non-execution of such transaction which the commercial
agent has concluded or has prepared for conclusion;
3) a significant decrease in the volume of transactions if the
principal anticipates such a decrease in comparison with the
volume upon which the commercial agent could usually rely.
(3) An arrangement which is contrary to the provisions of this
Section shall be void.
Section 49. Remuneration of a
Commercial Agent
(1) If remuneration has not been contracted for, a commercial
agent has the right to receive such remuneration as is normally
paid in the relevant area for the conclusion of equal or similar
transactions or their preparation for conclusion. If there is no
such a standard, a commercial agent has the right to a reasonable
remuneration which shall be determined by taking into account all
the circumstances associated with the relevant transaction.
(2) The remuneration to be disbursed to a commercial agent or
its part which fluctuates according to the number or value of
transactions is a commission.
(3) The provisions of Sections 50-52 of this Law shall be
applied to the commercial agent remuneration insofar as the
remuneration is entirely or partly paid in the form of a
commission.
Section 50. Rights of a Commercial
Agent to Commission
(1) A commercial agent has the right to commission for a
transaction which has been concluded during the period of
validity of the commercial agency contract, if such transaction
has been concluded as a result of his or her activities or with a
person whom the commercial agent has previously attracted as a
client for transactions of the same kind.
(2) If a commercial agent has been entrusted to operate in a
specific geographical territory or with a specific group of
clients, he or she has the right to commission also for such
transactions which, during the period of validity of the
commercial agency contract, have been concluded with a client who
belongs to such geographical territory or group of clients
without his or her participation.
(3) In relation to transactions which are concluded after the
commercial agency contract has expired a commercial agent has the
right to commission only if:
1) the transaction has been concluded primarily because of his
or her activities which were performed during the period of
validity of the commercial agency contract, and such transaction
was concluded within a reasonable period after the commercial
agency contract expired;
2) prior to the expiration of the commercial agency contract,
the commercial agent or the principal had received an offer from
a third party regarding the concluding of such a transaction for
which the commercial agent has the right to commission in
accordance with the provisions of Paragraph one or two of this
Section.
(4) A commercial agent does not have the right to a commission
in accordance with the provisions of Paragraph one or two of this
Section, if it is due to the previous commercial agent in
accordance with the provisions of Paragraph three of this
Section, except when special circumstances justify the equitable
division of the commission between these commercial agents.
Section 51. Setting in of the
Deadline for the Payment of Commission
(1) A commercial agent has the right to commission as soon as
and to the extent the principal has executed the transaction. The
parties may also agree on different provisions, however, from the
moment when the principal has executed the transaction, the
commercial agent has the right to an appropriate advance payment
which shall be paid not later than on the last day of the next
month. Irrespective of such an arrangement, the commercial agent
has the right to commission as soon as and to the extent the
third party has executed the transaction.
(2) If a principal has executed a transaction, but it is clear
that the third party will not execute the transaction, the right
of the commercial agent to commission expires. In such case, the
commercial agent has the obligation to return the amounts already
received.
(3) A commercial agent has the right to commission also when
it is clear that the principal has not fully executed the
transaction or has executed it only partially, or has not
executed the transaction in such a way as it was concluded. The
right of a commercial agent to commission in the case of
non-execution of the transaction shall expire only if and to the
extent the cause of such non-execution was circumstances
independent of the principal.
(4) The commission shall be disbursed not later than on the
last day of the month in which, in accordance with the provisions
of Section 52, Paragraph one of this Law, the principal has the
obligation to calculate the commission due to a commercial
agent.
(5) An arrangement which is contrary to the first sentence of
Paragraph two of this Section and also the provisions of
Paragraphs three and four of this Section shall be void if it
degrades the position of the commercial agent.
Section 52. Calculation of
Commission
(1) A principal has the obligation to calculate the amount of
commission due to a commercial agent each month. The calculation
period may be extended for not longer than up to three months.
The calculation shall be made without delay, but not later than
within one month after the end of the calculation period.
(2) A commercial agent may, upon receipt of a calculation,
request an extract from the accounting on all transactions for
which he or she has the right to commission. A commercial agent
also has the right to request information which is of significant
importance in respect of the right to receive a commission, the
setting in of its payment deadline and the calculation of the
commission.
(3) If the issuing of an extract from the accounting is
refused for a commercial agent or justified doubts have arisen of
the correctness or completeness of the calculation or the extract
from the accounting, the commercial agent may request the
principal to allow, pursuant to his or her choice, the commercial
agent or a sworn auditor selected by them to become acquainted
with the accounting and other documents insofar as is necessary
to determine the correctness or completeness of the calculation
or the extract from the accounting.
(4) Arrangements which revoke or restrict the rights of a
commercial agent referred to in this Section shall be void.
Section 53. Del credere
(1) A commercial agent who undertakes to guarantee the
fulfilment of the commitments of a third party (the other party
to a transaction) has the right to special remuneration (del
credere). An arrangement that revokes these rights in the future
shall be void.
(2) The guarantee referred to in Paragraph one of this Section
may only pertain to specific transactions or also to such
transactions with specific third parties which the commercial
agent has concluded or which he or she has prepared for
concluding. A guarantee contract shall be concluded in
writing.
(3) The right of a commercial agent to del credere arises at
the moment of concluding the relevant transaction.
[14 February 2002; 22 April 2004]
Section 54. Reimbursement of
Expenditures
A commercial agent may request the reimbursement of the
expenditures associated with his or her commercial activities
only if it is normally so accepted within the scope of commercial
rights.
Section 55. Limitation Period
The limitation period for claims arising from the commercial
agency contract shall expire within four years, counting from the
end of that calendar year in which they arose.
Section 56. Right to Retainer
(1) An arrangement in which a commercial agent waives a lawful
right to retainer in the future shall be void.
(2) After expiry of the commercial agency contract, a
commercial agent may retain the documents transferred at this or
her disposal only in relation to the commission (remuneration)
disbursable to him or her or the reimbursement of the
expenditures associated with his or her commercial
activities.
Section 57. Notice on the
Termination of a Commercial Agency Contract
(1) If a commercial agency contract is entered into for an
indefinite period, each of the parties to the contract may
terminate the commercial agency contract by complying with the
following notice periods:
1) one month, if the commercial agency contract is terminated
in its first year of validity;
2) two months, if the commercial agency contract is terminated
in its second year of validity;
3) three months, if the commercial agency contract is
terminated in its third year of validity;
4) four months, if the commercial agency contract is
terminated in its fourth or subsequent years of validity.
(2) Arrangements for shorter notice periods shall be void. If
longer notice periods are contracted, the notice period specified
for the principal may not be shorter than the notice period
specified for the commercial agent.
(3) Unless contracted otherwise, the commercial agency
contract shall be terminated at the end of the calendar
month.
(4) A commercial agency contract which is entered into for a
specific period and which both parties continue after the
expiration of the contracted period shall be considered to be
have been entered into for an indefinite period. When determining
the length of the notice period in accordance with Paragraphs one
and two of this Section, the total length of the contractual
relations shall be taken into account.
[22 April 2004]
Section 58. Notice on Immediate
Termination
(1) Both parties may, at any time, give a notice on the
termination of the commercial agency contract without complying
with the notice period if there is an important reason for it. An
arrangement which revokes or restricts such right to give a
notice on termination shall be void.
(2) If the notice on the immediate termination of the
commercial agency contract has been given due to such actions for
which the other party is liable, it shall have the obligation to
compensate the losses which have arisen in relation to the
termination of the contract.
Section 59. Right to an Indemnity or
Compensation for Losses
(1) After expiry of a commercial agency contract, a commercial
agent may request a relevant indemnity from the principal, if and
insofar as:
1) the principal gains substantial benefits from transaction
relations with new clients which were attracted by the commercial
agent even after the expiry of the commercial agency
contract;
2) the commercial agent loses, due to expiry of the commercial
agent in connection, the right to a commission or remuneration
which he or she would have had for the transactions already
concluded or to be concluded in the future with the clients
attracted by him or her if the commercial agency contract
relations were continued;
3) the payment of indemnity, taking into account all the
circumstances, is to be expected from the principal on the basis
of fairness.
(2) Within the meaning of Paragraph one, Clauses 1 and 2 of
this Section, the attraction of new clients shall mean also such
significant increase in the volume of transaction relations with
the existing clients of a principal which corresponds to the
attraction of new clients in economic terms.
(3) The amount of indemnity may not exceed the average annual
commission or other average annual remuneration, which is
calculated for the last five of the years of activities of the
commercial agent. If the commercial agency contract relations
have existed for a shorter period, the average annual commission
or other average annual remuneration shall be calculated for this
shorter period.
(31) A commercial agent has the right to
compensation for losses incurred due to the expiry of a
commercial agency contract, especially to compensation for
unearned expenses and investments which the commercial agent has
made upon a proposal of the principal while performing the
commercial agency contract.
(4) A commercial agent does not have the right to claim
indemnity or compensation for losses if:
1) he or she has provided a notice on the termination of the
commercial agency contract, except when the actions of the
principal have given a substantiated reason for the notice of
termination or the commercial agent cannot continue his or her
activities due to old age or illness;
2) the principal has provided a notice on the termination of
the commercial agency contract for such important reason the
basis of which is an action of the commercial agent who is at
fault;
3) based on an arrangement between the principal and the
commercial agent, a third party has replaced the commercial agent
in the commercial agency contract relations. Such an arrangement
may not be concluded prior to expiry of the commercial agency
contract.
(5) The parties may not agree on waiving the rights specified
in this Section to request the indemnity or compensation for
losses prior to the expiry of the commercial agency contract. The
limitation period for a claim for indemnity or compensation for
losses shall expire within a year after expiry of the commercial
agency contract.
[22 April 2004]
Section 60. Obligation of a
Commercial Agent to Keep Trade Secrets
Even after expiry of the commercial agency contract, a
commercial agent is prohibited from using or disclosing to third
parties trade secrets which are entrusted to him or her or of
which he or she has become aware in relation to his or her
activities for the benefit of the principal.
Section 61. Restriction on
Competition
(1) An arrangement by which the professional activities of a
commercial agent are restricted after expiry of the commercial
agency contract (restrictions on competition) shall be entered
into in writing.
(2) A restriction on competition may relate only to the
geographical territory or the group of clients entrusted to the
commercial agent and is restricted to the field of activities in
which he or she cared for the conclusion of transactions or their
preparation for conclusion. The time limit for the restrictions
on competition may not exceed two years after expiry of the
commercial agency contract.
(3) A principal has the obligation to pay a relevant
remuneration to a commercial agent for the period of competition
restrictions.
(4) A principal may, at any time, waive the restrictions on
competition in writing before the expiry of the commercial agency
contract. In such case, the obligation of the principal to pay
the remuneration referred to in Paragraph three of this Section
shall expire six months after the date of notifying the waiver.
If the principal provides a notice on the termination the
commercial agency contract due to such important reason the basis
of which is an action of the commercial agent who is at fault,
the commercial agent shall lose the right to receive
remuneration.
(5) If a commercial agent has cancelled the commercial agency
contract due to such important reason the basis of which is an
action of the principal who is at fault, the commercial agent may
waive the restrictions of competition in writing within one month
after the notice of the termination of the commercial agency
contract.
(6) An arrangement which is contrary to the provisions of this
Section shall be void if it degrades the position of the
commercial agent.
Section 62. Restrictions on
Authorisations of a Commercial Agent
(1) The provisions of Section 41 of this Law shall be
applicable also to such commercial agent who has been authorised
to conclude transactions by a principal who is not a
merchant.
(2) A commercial agent shall be, also if he or she is not
authorised to conclude transactions, considered as authorised to
accept notices on any deficiencies of goods, the delivery of
goods, and other similar notices with the assistance of which
third parties exercise or reserve their rights in relation to the
unsatisfactory fulfilment of a commitment, as well as exercise
the right to secure evidence belonging to the principal.
(3) The restrictions on the rights of a commercial agent
referred to in Paragraph one of this Section shall be binding on
third parties only if they were aware or should have been aware
of such restrictions.
Section 63. Insufficiency of
Authorisation
(1) If a commercial agent who has been authorised only to
prepare transactions for conclusion concludes a transaction in
the name of the principal, and the third party is not aware that
the commercial agent is not authorised for this, it shall be
considered that the principal has approved the transaction if the
principal, after the commercial agent or the third party has
notified him or her of the conclusion of the transaction and its
contents, has not repudiated such transaction without delay.
(2) The provisions of Paragraph one of this Section shall also
apply to cases when a commercial agent who is authorised to
conclude transactions has concluded such a transaction in the
name of the principal as he or she was not authorised to
conclude.
Division
VII
BROKER
Section 64. Definition of a
Broker
(1) A broker is a merchant who engages in intermediation for
concluding transactions for the benefit of other persons, not
being permanently associated with such persons through
contractual relations.
(2) The provisions of this Chapter shall not apply to persons
who conduct stock exchange transactions.
Section 65. Final Text of a
Transaction Document
(1) A broker has the obligation to, without delay after
concluding a transaction, submit to each of the parties to the
transaction the final text of the transaction document certified
by the broker in which the parties to the transaction, the
subject matter of the transaction and the provisions of the
transaction are indicated, unless the parties to the transaction
have released the broker from this obligation.
(2) In transactions which are not to be executed immediately,
the final text of the transaction document shall be submitted to
the parties to the transaction for signing, and each of the
parties shall submit to the other party a signed transaction
document.
(3) If one party to the transaction refuses to accept or sign
the final text of a transaction document, a broker has the
obligation to inform, without delay, the other party about
it.
Section 66. Reserved Tasks
(1) If one party to a transaction accepts the final text of a
transaction document according to which a broker reserves the
right to later indicate the other party to the transaction, it
shall have binding transaction relations with the other party to
the transaction indicated later by the broker, unless justified
objections are raised against the latter.
(2) A broker has an obligation to indicate to the other party
to the transaction within the time limit specified, but if such
is not specified - within a time limit appropriate for the
relevant circumstances.
(3) If a broker does not indicate the other party to the
transaction within the time limit specified in Paragraph two of
this Section or justified objections may be raised against the
other party to the transaction, then the first party to the
transaction has the right to request the execution of the
transaction from the broker. Such right shall expire if, pursuant
to a request of the broker, the first party to the transaction
fails to notify without delay of whether it shall request the
broker to execute the transaction.
Section 67. Storage of Samples
(1) If goods have been sold through the intermediation of a
broker pursuant to a sample which was transferred to the broker,
he or she has an obligation to store this sample until the goods
are accepted without objections regarding their characteristics
or the transaction is executed in some other way. Samples shall
be labelled with a relevant label.
(2) A broker does not have the obligation to store samples, if
he or she is released from this obligation under the practices,
taking into account the type of the relevant goods, or by the
parties to the transaction.
Section 68. Receipt of
Fulfilment
A broker is not considered to be authorised to receive
payments or any other fulfilment specified in a transaction
concluded with his or her intermediation.
Section 69. Liability of a
Broker
A broker shall be liable towards each of the parties to a
transaction for the losses which have been caused due to his or
her fault.
Section 70. Remuneration of a
Broker
(1) The right to the remuneration of a broker shall arise at
the moment of concluding a transaction.
(2) If the parties to a transaction have not agreed which of
them has the obligation to pay the remuneration of a broker, they
shall pay the remuneration in equal parts.
Section 71. Reimbursement of
Expenditures
A broker may request the reimbursement of expenditures
incurred thereby only if such rights have been specifically
contracted for.
Section 72. Journal of
Transactions
(1) A broker has the obligation to keep a journal of
transactions and enter all concluded transactions therein on a
daily basis, indicating the information referred to in Section
65, Paragraph one of this Law. The broker shall enter the records
in chronological order and sign them every day.
(2) Entries in a journal of transactions must be complete,
accurate, timely entered, understandable and systematically
arranged.
(3) If the entries in a journal of transactions are corrected,
the original content of them must be visible, and every
correction must be specially indicated and certified with a
signature. Corrections may not be made in such a way that it
cannot be understood when and why they have been made.
(4) A journal of transactions may be kept in electronic form
if such procedures for the accounting of transactions corresponds
to the regulations for properly conducted accounting and the
provisions of Paragraphs one, two and three of this Section. In
such case, a data image in a readable form and, where necessary,
an extract thereof must be provided to a third party.
(5) A journal of transactions shall be stored in the archives
of the broker for five years after the end of that calendar year
in which the last entry was made. These provisions shall be
accordingly applied if the journal of transactions is kept in
electronic form.
Section 73. Extracts from a Journal
of Transactions
(1) A broker has the obligation to, at any time upon request
of any of the parties to the transaction, issue extracts
certified with his or her signature from the journal of
transactions in which all the information entered in the journal
of transactions on the transaction which has been concluded for
the benefit of such persons through the intermediation of the
broker are indicated.
(2) A court may request the presentation of a journal of
transactions.
Part B
MERCHANTS
Division
VIII
SOLE PROPRIETORSHIP
Section 74. Sole Proprietorship
A sole proprietorship is a natural person who is entered as a
merchant in the Commercial Register.
Section 75. Registration of a Sole
Proprietorship
(1) A natural person who performs economic activities has the
obligation to apply himself or herself for entering in the
Commercial Register as a sole proprietorship if the annual
turnover from economic activities performed by him or her exceeds
EUR 284 600, or the economic activities performed by him or her
conforms to the activities of a commercial agent (Section 45 of
this Law) or activities of a broker (Section 64, Paragraph one of
this Law), or the economic activities performed by him or her
conform to the following features:
1) the annual turnover from such activities exceeds EUR 28
500;
2) for the performance of economic activities, he or she
simultaneously employs more than five employees.
(2) A natural person may apply himself or herself for entering
in the Commercial Register as a merchant also in the absence of
the circumstances referred to in Paragraph one of this
Section.
(3) The basis for the entry of a sole proprietorship in the
Commercial Register shall be an application of a natural person
to the Commercial Register Office.
(4) The application shall specify the legal address of an
individual merchant, including the cadastral designation of the
immovable property object (building, residential property or
premises), and certify that the individual merchant is reachable
and it has legal basis to be at the specified legal address.
[14 February 2002; 16 March 2006; 24 April 2008; 15 April
2010; 16 June 2011; 19 September 2013; 15 June 2017; 6 July
2021]
Section 76. Right of a Sole
Proprietorship to Use a Firm Name and Liability
(1) A sole proprietorship may conclude transactions which are
associated with commercial activities by using his or her firm
name and also be a plaintiff and a defendant in a court.
(2) A sole proprietorship shall be liable for his or her
commitments with the whole of his or her property.
(3) The limitation period for claims against a sole
proprietorship which arise from the performance of his or her
commercial activities shall expire within three years after his
or her deletion from the Commercial Register if the claim is not
subject to a shorter limitation period.
(4) If the deadline or condition for the fulfilment of
commitments of a sole proprietorship comes into effect after the
sole proprietorship has been deleted from the Commercial
Register, the limitation period for a claim of a creditor shall
commence from the moment when the deadline or condition for the
fulfilment of commitments sets in.
Division
IX
GENERAL PARTNERSHIP
Chapter 1
General Provisions
Section 77. Definition of a General
Partnership
(1) A general partnership is a partnership the purpose of
which is the performance of commercial activities through the use
of a joint firm name and in which two or more persons (members)
have united on the basis of a partnership agreement, without
limiting their liability against creditors of the general
partnership.
(2) The provisions of the Civil Law for partnership agreements
shall be applicable to a general partnership (hereinafter in this
Division - the partnership) insofar as this Chapter does not
specify otherwise.
Section 78. Application for Entering
in the Commercial Register
(1) The foundation of the partnership shall be applied for
entering in the Commercial Register.
(2) The address entered in the Commercial Register shall be
regarded as the legal address of the partnership.
(21) The application shall specify the legal
address of the partnership, including the cadastral designation
of the immovable property object (building, residential property
or premises), and certify that the partnership is reachable and
it has legal basis to be at the specified legal address.
(3) Changes in the firm name of the partnership and also a new
member joining the partnership shall be applied for entering in
the Commercial Register.
(4) All members of the partnership have the obligation to sign
the applications referred to in Paragraphs one, two and three of
this Section.
(5) [15 April 2010]
[22 April 2004; 16 March 2006; 15 April 2010; 16 June 2011;
15 June 2017; 6 July 2021]
Chapter 2
Mutual Relations between Members
Section 79. Partnership
Agreement
The mutual relation between the members of the partnership
shall be considered in accordance with the provisions of the
partnership agreement. If there are no such provisions, the
provisions of Sections 80-88 of this Law shall be applicable.
Section 80. Reimbursement of
Expenditures and Losses
(1) If a member of the partnership, when handling matters of
the partnership, covers the necessary expenditures on his or her
own account or suffers losses which directly arise from the
record-keeping of the partnership or the risk associated
therewith, the partnership has the obligation to reimburse such
expenditures and losses thereto.
(2) When reimbursing expenditures and losses, the partnership
has the obligation to also pay the statutory interest which shall
be calculated from the moment when the expenditures and losses
referred to in Paragraph one of this Section arose.
Section 81. Obligation of a Member
of the Partnership to Pay Interest
(1) If a member of the partnership has failed to pay his or
her monetary contribution within the specified period or has not
transferred cash collected to the cashier's office of the
partnership, or also has taken money from the cashier's office of
the partnership without authorisation, he or she has the
obligation to pay the statutory interest from the day when the
payment of the contribution had to be made or when the money had
to be transferred, or also when the money was taken without
authorisation.
(2) The payment of interest does not release the member of the
partnership from the obligation to reimburse losses.
Section 82. Prohibition of
Competition
(1) A member of the partnership may not, without the consent
of the rest of the members, conclude transactions in the sector
of commercial activities of the partnership or be a personally
liable member in another partnership which performs the same
commercial activities.
(2) Consent to participation in another partnership referred
to in Paragraph one of this Section shall be deemed as given if,
when the partnership was founded, the rest of the members were
aware of such participation in another partnership and they did
not specifically object to it.
(3) If a member of the partnership violates the provisions of
Paragraph one of this Section, the partnership has the right to
request reimbursement of losses or the recognition of the
relevant transactions as concluded in the name of the
partnership, and the transfer of the income gained or the right
to claim thereto to the partnership. The rest of the members of
the partnership shall decide on the bringing of such action.
(4) The limitation period for claims referred to in Paragraph
three of this Law shall expire within three months from the day
when the rest of the members of the partnership have become aware
of a violation of the prohibition of competition, but not later
than within five years from the day of committing the
violation.
Section 83. Record-keeping of the
Partnership
(1) All members of the partnership have the right and
obligation to participate in the record-keeping of the
partnership.
(2) If the record-keeping of the partnership is entrusted to
one member of the partnership or to several members of the
partnership (record-keepers) in accordance with the partnership
agreement, the rest of the members shall not participate in the
record-keeping of the partnership.
(3) If the record-keeping of the partnership is entrusted to
all or several members, then each of them has the right to act
individually. Individual actions shall not be allowed if another
record-keeper objects to it.
(4) If the partnership agreement stipulates that members to
whom the record-keeping of the partnership has been entrusted may
act only jointly, for each transaction the consent of all the
record-keepers shall be necessary, unless a risk of delay
exists.
Section 84. Scope of Record-keeping
Powers
(1) The scope of record-keeping powers of the partnership
shall include any actions which are associated with the usual
commercial activities of the partnership.
(2) The consent of all members of the partnership shall be
necessary for actions which exceed the usual commercial
activities of the partnership.
(3) A procuration may be issued only with the consent of all
record-keepers of the partnership, unless a risk of delay exists.
The procuration may be revoked by any record-keeper of the
partnership.
Section 85. Revocation of
Record-keeping Powers
(1) The record-keeping powers of a member of the partnership
may be revoked by a court ruling on the basis of a relevant claim
by the rest of the members, if there is an important reason for
it.
(2) A gross violation in the performance of obligations and
the inability to properly keep records of the partnership shall
be especially considered to be important cause.
Section 86. Control Rights of
Members
(1) Any member of a partnership may, at any time, ascertain
the course of partnership matters, become acquainted with the
accounting and other documents of the partnership, and also
prepare for themselves a report on the state of the property,
balance sheets and annual statement of the partnership.
(2) Arrangements which are contrary to Paragraph one of this
Section shall be void.
Section 87. Taking of a Decision
(1) To take a decision the consent of all those members of the
partnership who have the right to take the relevant decision
shall be necessary.
(2) If a partnership agreement specifies that a decision must
be taken by a majority of votes, then, in case of doubt, the
majority shall be determined according to the number of members
in the partnership.
[14 February 2002]
Section 88. Profits and Losses
(1) The profits and losses of the partnership shall be
determined at the end of every reporting year based upon the
annual statement of the partnership which has been approved by
the members of the partnership.
(2) The profits and losses of the partnership shall be divided
between members in proportion to their contribution (capital)
shares in the partnership. The profit share calculated for each
member of the partnership shall be added to his or her
contribution (capital) share, on the other hand, in the case of
losses, his or her contribution (capital) share shall be reduced
by the amount of calculated loss.
(3) If a member of the partnership has not paid in his or her
contribution which he or she should have paid in accordance with
the partnership agreement until the division of profits, the
contribution together with interest shall be withheld from the
profit share due to the member.
(4) A member of the partnership may request the disbursement
of his or her profit share if it does not harm the partnership
and his or her contribution (capital) share has not
decreased.
[14 February 2002]
Chapter 3
Relations of Members of the Partnership with Third Parties
Section 89. Existence of the
Partnership in Relation to Third Parties
(1) The partnership shall be existing in relation to third
parties from the moment when it is entered in the Commercial
Register.
(2) If the partnership has concluded its transactions already
before its entry in the Commercial Register, the partnership
shall be deemed to have existed from the moment when the
transaction was concluded.
(3) An arrangement on the fact that the partnership shall be
deemed to exist at a later time shall be void as to third
parties.
Section 90. Legal Status of the
Partnership
(1) The partnership may, through the use of its firm name,
acquire rights and undertake commitments, acquire property rights
and other rights in rem, and also be a plaintiff and defendant in
a court.
(2) Recovery may be directed against the property of the
partnership only under a court ruling in the case where the
partnership is the defendant.
Section 91. Representation of the
Partnership
(1) Every member of the partnership has the right to represent
the partnership in relations with third parties, unless they have
been excluded from representation under the partnership
agreement.
(2) A partnership agreement may specify that all or several
members of the partnership are entitled to represent the
partnership only jointly (joint representation). These members
may authorise one member or several members from among themselves
to conclude specific transactions or specific types of
transactions. The intent of a third party shall be deemed to be
expressed as to the partnership if it has been expressed to at
least one of its members who is entitled to represent the
partnership.
(3) [22 April 2004]
(4) The exclusion of a member of the partnership from
representation, determination of joint representation in
accordance with the provisions of Paragraphs two and three of
this Section, and also any changes in the representation powers
of the members of the partnership shall be applied for entering
in the Commercial Register. It is the obligation of all members
of the partnership to sign these applications.
[22 April 2004]
Section 92. Scope of
Representations
(1) The representation by members of the partnership shall
apply to all transactions and other lawful activities, including
the alienation and encumbering with rights in rem of an immovable
property, and also the issuing and revocation of a
procuration.
(2) Restrictions on the scope of representation shall be void
as to third parties.
(3) The provisions of Paragraph two of this Section shall
specially apply to such restrictions on the scope of
representation in conformity with which representation shall be
conducted:
1) in relation to specific transactions or specific types of
transactions;
2) when certain circumstances exist;
3) for a specific period or in a specific geographical
territory.
(4) If joint representation is entered in the Commercial
Register, it shall not be deemed to be a restriction on the scope
of representation.
(5) Restrictions on the scope of representation in relation to
one of several branches of a partnership undertaking (branch
representation) shall be in effect in relation to third parties
only if these branches have a different firm name entered in the
Commercial Register.
Section 93. Revocation of
Representation
(1) The representation of a member of the partnership may be
revoked by a court ruling on the basis of a relevant claim of the
rest of the members, if there is an important reason for it.
(2) A gross violation in the fulfilment of obligations and
also the inability to properly represent the partnership shall be
especially considered to be an important reason.
Section 94. Personal Liability of
the Members of the Partnership
(1) Members of the partnership shall be personally liable for
the commitments of the partnership with all of their property as
joint debtors.
(2) Arrangements which are contrary to the provisions of
Paragraph one of this Section shall be void as to third
parties.
Section 95. Objections of Members of
the Partnership
(1) If an action has been brought against a member of the
partnership for the fulfilment of the commitments of the
partnership, he or she has the right to raise objections not
associated with himself or herself only to such an extent as the
partnership could raise them.
(2) A member of the partnership may refuse to satisfy a claim
of a creditor, while:
1) the partnership has the right to contest the transaction
which is the basis for the commitment of the partnership;
2) the creditor may satisfy their claim by an offset in
respect of the fulfilment of an enforceable claim of the
partnership.
(3) On the basis of a court ruling which has come into legal
effect in a case where the only defendant is the partnership,
recovery may not be directed against the property of a member of
the partnership.
Section 96. Liability of a New
Member of the Partnership
(1) A member of the partnership who joins an already existing
partnership shall be jointly liable with other members of the
partnership in accordance with the provisions of Sections 94 and
95 of this Law also for the commitments of the partnership which
have arisen before he or she joined the partnership.
(2) Arrangements which are contrary to the provisions of
Paragraph one of this Section shall be void as to third
parties.
Chapter 4
Termination of the Partnership and the Withdrawal of a Member of
the Partnership
Section 97. Basis for the
Termination of the Partnership and the Withdrawal of a Member of
the Partnership
(1) The partnership shall be terminated:
1) when the period for which it was founded expires;
2) by a decision of the members of the partnership;
3) with the commencement of bankruptcy procedures;
4) by a court ruling.
(2) Unless the partnership agreement specifies otherwise, the
basis for the withdrawal of a member of the partnership shall
be:
1) the death of the member of the partnership;
2) the declaration of the member of the partnership as
insolvent;
3) a notice of termination of the member of the
partnership;
4) the expulsion of the member from the partnership;
5) other reasons specified in the partnership agreement.
Section 98. Termination of the
Partnership by a Court Ruling
(1) The partnership founded for a specific period may be
terminated before the end of the specific period and the
partnership founded for an indefinite period may be terminated by
a court ruling on the basis of a relevant claim of a member of
the partnership, if there is an important reason for it.
(2) Important reason shall especially exist in situations
where another member of the partnership violates significant
obligations imposed upon him or her by the partnership agreement
in bad faith or by allowing gross negligence or such obligation
have become impossible to fulfil.
(3) Arrangements which revoke or restrict the right to request
the termination of the partnership shall be void.
Section 99. Notice of Termination by
a Member of the Partnership
(1) If the partnership is founded for an indefinite period, a
member of the partnership has a right to withdraw from the
partnership, providing a notice of the termination of the
partnership agreement not later than six months before the end of
the reporting year.
(2) In the final settlement between the partnership and the
leaving member, the status of the property of the partnership at
the end of the reporting year referred to in Paragraph one of
this Section shall be taken into account.
Section 100. Partnerships Founded
for an Indefinite Period
Within the meaning of Sections 98 and 99 of this Law,
partnerships which are founded for an indefinite period shall
also be partnerships which:
1) were founded until the death of a member of the
partnership;
2) upon the expiration of the period for which they were
founded, they tacitly are continued.
Section 101. Expulsion of a Member
of the Partnership Pursuant to a Request of His or Her
Creditor
If a creditor of a member of the partnership is unable to
satisfy his or her claim within six months by directing the
recovery against the property of the member of the partnership,
he or she has the right to bring an action to a court for the
expulsion of the member from the partnership and the satisfaction
of the claim of the creditor from the sum which would have been
disbursed to the member of the partnership if the partnership had
been terminated at the moment of bringing the action.
Section 102. Expulsion of a Member
of the Partnership Pursuant to a Request of the Other Members of
the Partnership
(1) In cases when the right to bring an action for the
termination of the partnership has arisen to the members of the
partnership in accordance with the provisions of Section 98 of
this Law, they may instead request the expulsion of the member at
fault from the partnership.
(2) In the final settlement between the partnership and the
expelled member, the status of the property of the company at the
moment of bringing the action referred to in Paragraph one of
this Section shall be taken into account.
Section 103. Transfer of an
Undertaking of the Partnership to Another Member of the
Partnership
If there are two members in the partnership and one of them
withdraws in accordance with the provisions of Sections 99, 101,
and 102 of this Law, the partnership shall be terminated without
liquidation and the undertaking of the partnership shall transfer
to the other member of the partnership who has the obligation to
apply itself for entering in the Commercial Register as a sole
proprietorship, by accordingly applying for the deletion of the
partnership from the Commercial Register.
Section 104. Heirs Joining the
Partnership
(1) In case of the death of a member of the partnership, his
or her heir has the right to become a member of the partnership,
if this is specified in the partnership agreement or if all
members of the partnership agree to it.
(2) If the partnership agreement stipulates that only one of
the heirs may become a member of the partnership, but this person
or the way in which this person shall be selected is not
specified, the member of the partnership may appoint this person
based on a will.
(3) If the heir or the heirs are granted the status of a
limited partner with the consent of the rest of the members of
the partnership, it shall be deemed that the partnership has been
transformed into a limited partnership, and it shall be applied
for entering in the Commercial Register. An heir shall acquire
the right to such profit share as had the deceased member of the
partnership. The partnership agreement may specify the reduction
of the profit share due to the heir, if the profit share due to
the deceased member had been increased in accordance with the
partnership agreement, taking into account his or her activities
or increased responsibility.
(4) If an heir does not wish to or cannot become a member of
the partnership or the other members of the partnership do not
agree to it, the heir has the right to receive that which would
have been due to the deceased member of the partnership
(estate-leaver) in conformity with his or her part of the estate
at the moment of final settlement if the partnership were
liquidated at the moment of opening the succession.
(5) An heir may submit an application to the partnership for
joining the partnership within three months after the moment of
opening the succession.
(6) If an heir who has joined the partnership withdraws or the
partnership is terminated or he or she has been granted the
status of a limited partner within the term specified in
Paragraph five of this Section, the heir shall be liable
according to general procedures for the commitments of the
partnership which have arisen before his or her withdrawal, the
termination of the partnership or the granting of the status of a
limited partner.
[14 February 2002]
Section 105. Application for the
Termination of the Partnership and Entry of the Withdrawal of a
Member of the Partnership in the Commercial Register
(1) The termination of the partnership shall be applied for
entering in the Commercial Register by indicating the reason for
the termination of the partnership in the application. It is the
obligation of all members of the partnership to sign such an
application.
(2) If the partnership is terminated with the commencement of
bankruptcy procedures, the termination of the partnership shall
be entered in the Commercial Register on the basis of a court
ruling.
(3) The provisions of Paragraph one of this Section shall be
accordingly applied to the application for entering in the
Commercial Register of the withdrawal of a member of the
partnership. The expulsion of a member of the partnership from
the partnership shall be entered in the Commercial Register on
the basis of a court ruling.
(4) If the basis for the termination of the partnership or the
withdrawal of a member of the partnership is the death of the
member of the partnership, it is the obligation of all other
members of the partnership to sign the application for entering
in the Commercial Register of the termination of the partnership
or the withdrawal of a member of the partnership.
[15 June 2017]
Chapter 5
Liquidation of the Partnership
Section 106. Necessity for the
Liquidation of the Partnership
The partnership shall be liquidated after the termination of
the partnership, except when a different way of final settlement
is laid down in the partnership agreement or also the partnership
has been declared as insolvent.
Section 107. Entering of a
Liquidator in the Commercial Register
(1) Liquidators shall be applied for entering in the
Commercial Register. It is the obligation of all members of the
partnership to sign such an application. Similarly, any changes
in the composition of liquidators or in the scope of their
representations shall be applied for entering in the Commercial
Register. A written consent of each liquidator to be a liquidator
shall be appended to the application. The liquidator shall
indicate in the consent the firm name and the registration number
of the partnership the liquidator of which he or she agrees to
become.
(2) In case of the death of a member of the partnership, the
applications referred to in Paragraph one of this Section shall
be signed by the other members of the partnership.
(3) [15 April 2010]
(4) [2 May 2013]
[16 March 2006; 15 April 2010; 2 May 2013]
Section 108. Several Liquidators
(1) If liquidation is conducted by several liquidators, they
have the right to perform the activities associated with the
liquidation only jointly, unless it has been specified that the
liquidators may perform these activities separately. Such a
provision shall be applied for entering in the Commercial
Register.
(2) Liquidators may authorise one or more liquidators from
among themselves to conclude specific transactions or specific
types of transactions. The intent of a third party shall be
deemed to be expressed in relation to the partnership if it has
been expressed to at least one liquidator.
Section 109. Void Restrictions on
Powers of a Liquidator
Restrictions on the powers of a liquidator shall be void as to
third parties.
Section 110. Instructions from
Members of the Partnership
Liquidators have the obligation to comply with such
instructions which, in relation to the record-keeping of the
partnership, have been adopted unanimously by the members of the
partnership.
Section 111. Signature of a
Liquidator
Liquidators shall sign by adding his or her signature and an
indication regarding the liquidation of the partnership to the
firm name of the partnership.
Section 112. Division of Partnership
Property
(1) After the settlement of debts, liquidators shall divide
the remainder of the property of the partnership between the
members of the partnership in conformity with the amount of their
investment (capital) shares as specified in the closing balance
sheet of the partnership.
(2) Cash which is not necessary during the liquidation shall
be divided conditionally between the members of the partnership.
The funds necessary to cover the commitments the deadline or
condition for the fulfilment of which has not set in and to cover
disputed commitments, and also to secure such sums as are due to
the members of the partnership at the final settlement shall be
withheld.
(3) If a dispute should arise between the members of the
partnership over the division of the property of the partnership,
liquidators have the obligation to postpone the division until
the dispute is resolved.
Section 113. Other Types of
Settlement
If the members of the partnership have agreed on another type
of final settlement, third parties shall be, insofar as undivided
partnership property still exists, subject to the relevant
provisions of this Chapter.
Section 114. Legal Relations of the
Members of the Partnership
Until completion of the liquidation, the provisions of
Chapters 2 and 3 of this Division shall be applicable to the
existing mutual relations between the members of the partnership
and the relations of the partnership with third parties, insofar
as it is not specified otherwise in this Chapter or does not
arise otherwise from the purpose of liquidation.
Section 115. Application for the
Deletion of the Partnership from the Commercial Register
(1) After the end of liquidation, all the liquidators of the
partnership have the obligation to apply for the deletion of the
partnership from the Commercial Register.
(2) Documents of the partnership shall be transferred for
storage to one of the members of the partnership or to a third
party in Latvia, agreeing upon the place of storage thereof with
the National Archives of Latvia. Documents of the partnership
that with archival value shall be transferred for storage to the
National Archives of Latvia in accordance with the provisions of
the Archives Law.
(3) Members of the partnership and their heirs retain the
right to become acquainted with the accounting and other
documents of the partnership and also to use them. The right to
use the documents transferred to the National Archives of Latvia
is stipulated by the Archives Law.
[14 February 2002; 29 November 2012]
Chapter 6
Limitation Period and Restrictions on Liability
Section 116. Claims against a Member
of a Partnership
(1) The limitation period for claims arising from the
commitments of the partnership against a member of the
partnership shall expire within three years after the termination
of the partnership, if the claim against the partnership is not
subject to a shorter limitation period.
(2) The limitation period shall commence from the day when the
termination of the partnership is entered in the Commercial
Register.
(3) If the deadline or condition for the fulfilment of the
commitments of the partnership comes into effect after the
termination of the partnership has been entered in the Commercial
Register, the limitation period for a claim of a creditor shall
commence from the moment when the deadline or condition for the
fulfilment of commitments sets in.
(4) Interruption of the limitation period in relation to a
terminated partnership shall be in effect also in relation to
those members of the partnership who participated in it at the
time of termination.
Section 117. Liability of Such
Member of a Partnership Who has Withdrawn from the
Partnership
If a member of a partnership withdraws from the partnership,
he or she shall be liable only for those commitments of the
partnership which have arisen before his or her withdrawal and
the deadline or condition for the fulfilment of which has come
into effect before his or her withdrawal or within five years
after withdrawal, counting from the day when the withdrawal of
the member of the partnership was entered in the Commercial
Register.
Division
X
LIMITED PARTNERSHIP
[14 February 2002]
Section 118. Definition of a Limited
Partnership
(1) A limited partnership is a partnership (hereinafter in
this Division - the partnership) the purpose of which is the
performance of commercial activities through the use of a joint
firm name and in which two or more persons (members) have united
on the basis of a partnership agreement if the liability of at
least one of the members of the partnership (limited partner)
towards the creditors of the partnership is limited to the amount
of their contribution, but the liability of the other personally
liable members of the partnership (general partners) is not
limited.
(2) The provisions of this Law for general partnerships shall
be applied to a limited partnership, unless specified otherwise
in this Division.
[14 February 2002]
Section 119. Application for
Entering in the Commercial Register
[15 June 2017]
Section 120. Relationships between
the Members of the Partnership
If the partnership agreement does not specify otherwise, the
provisions of Sections 121-125 of this Law shall be applied to
the relationships between members of the partnership.
Section 121. Record-keeping of the
Partnership
(1) Limited partners do not have the right to participate in
the record-keeping of the partnership.
(2) Limited partners do not have the right to object to the
actions of a general partner, except in the case when these
actions exceed the scope of the usual commercial activities of
the partnership.
[14 February 2002]
Section 122. Prohibition of
Competition
The provisions of Section 82 of this Law shall not be
applicable to a limited partner, except when the right to keep
records of the partnership has been granted thereto under the
partnership agreement or it has other significant influence on
record-keeping of the partnership.
[14 February 2002]
Section 123. Right of Control
(1) A limited partner has the right to, at any time, request a
written report on the status of the property of the partnership
and to verify its accuracy by becoming acquainted with the
accounting and other documents of the partnership.
(2) On the basis of a relevant claim brought by a limited
partner, a court may request from the partnership a written
report on the status of the property of the partnership (copies
of the balance sheet and annual statement), as well as the
presentation of accounting and other documents of the
partnership, if there is an important reason for it.
[14 February 2002]
Section 124. Profits and Losses
(1) In relation to limited partners, the provisions of Section
88, Paragraphs one, two, and three of this Law shall be
applied.
(2) The profit share of the partnership which is due to a
limited partner shall be included in their capital share until it
reaches the specified amount of contribution.
(3) A limited partner shall participate in losses only to the
amount of their capital share and contribution not yet made.
[14 February 2002]
Section 125. Disbursement of Profit
Share
(1) A limited partner may request the disbursement of the
profit share due them, except when their capital share in
relation to the specified amount of contribution has decreased as
a result of losses or also would decrease as a result of the
disbursement of the profit share due them.
(2) A limited partner does not have the obligation to return
the profit share disbursed to them in relation to further losses
of the partnership.
[14 February 2002]
Section 126. Representation of the
Partnership
A limited partner does not have the right to represent the
partnership in relations with third parties.
[14 February 2002]
Section 127. Liability of Limited
Partners
Limited partners shall be liable towards the creditors of the
partnership in the amount of their contribution until the
contribution is made. Such liability shall be excluded as soon as
the contribution has been made.
[14 February 2002]
Section 128. Amount of Liability of
Limited Partners
(1) After entering the partnership in the Commercial Register,
the amount of the liability of limited partners in relation to
the creditors of the partnership shall be determined in
conformity with the amount of their contribution entered in the
Commercial Register.
(2) An arrangement of the members of a partnership according
to which a limited partner is released from making a contribution
or the making of a contribution is postponed shall be void as to
creditors.
(3) Insofar as the contribution of a limited partner has been
repaid to them, such shall be deemed to have not been made in
relation to the creditors of the partnership. This provision is
in force also if a profit share has been disbursed to the limited
partner when their contribution (capital) share in relation to
the amount of contribution made has decreased as a result of
losses or also insofar as their contribution (capital) share in
relation to the specified amount of contribution has decreased as
a result of the disbursement of the profit share.
[14 February 2002]
Section 129. Liability of a Limited
Partner When Joining the Partnership
(1) If a limited partner joins an existing partnership, he or
she shall be, in accordance with the provisions of Sections 127
and 128 of this Law, liable for those commitments of the
partnership which have arisen before he or she joined the
partnership.
(2) Arrangements which are contrary to the provisions of
Paragraph one of this Section shall be void as to third
parties.
[14 February 2002]
Section 130. Reduction of
Contributions
The reduction of the contribution of a limited partner, while
it has not been entered in the Commercial Register, shall be void
as to creditors. A reduction of the contribution of the limited
partner does not apply to a creditor the claim of which has
arisen before the reduction of contribution is entered in the
Commercial Register.
[14 February 2002]
Section 131. Application for
Entering Change of Contribution in the Commercial Register
An increase or decrease of a contribution shall be applied for
entering in the Commercial Register. It is the obligation of all
members of the partnership to sign such an application.
Section 132. Liability of Limited
Partners Before the Entry of the Partnership in the Commercial
Register
(1) If a partnership has commenced its transactions before its
entry in the Commercial Register, each limited partner who has
agreed to the commencement of transactions shall be liable as a
general partner for the commitments of the partnership which have
arisen before the entry of the partnership in the Commercial
Register, except when the creditor was aware of their
participation in the partnership as a limited partner.
(2) If a limited partner joins an existing partnership, the
provisions of Paragraph one of this Section shall be
correspondingly applied to those commitments of the partnership
which have arisen in the period between their joining and their
entering in the Commercial Register as a limited partner.
[14 February 2002]
Section 133. Death of a Limited
Partner
In the case of the death of a limited partner, his or her
heirs continue to participate in the partnership if the
partnership agreement does not specify otherwise.
[14 February 2002]
Division
XI
CAPITAL COMPANY
Chapter 1
General Provisions
Section 134. Definition of a Capital
Company
(1) A capital company (hereinafter in this Division - the
company) is a commercial company the equity capital of which
consists of the total sum of the nominal values of the equity
capital shares or stocks (hereinafter in this Division - the
shares).
(2) A capital company is a limited liability company or a
joint-stock company.
(3) A limited liability company is a private company the
shares of which are not publicly tradable objects.
(4) A joint-stock company is a public company the shares
(stock) of which may be publicly tradable objects.
Section 135. Legal Status of the
Company
(1) The company is a legal person.
(2) The company shall be deemed to be founded and shall
acquire the status of a legal person from the date when it is
entered in the Commercial Register.
Section 136. Shareholder
(1) The shareholder is a person who has been entered in the
register of shareholders (stockholders), unless it has been
otherwise specified in the law.
(2) Founders shall acquire the status of a shareholder from
the date when the company is entered in the Commercial
Register.
(3) Within the scope of this Division, the term "shareholder"
shall mean the shareholder of a limited liability company and a
stockholder of a joint-stock company.
[2 May 2013]
Section 136.1 Obligation
of a Shareholder to Notify the Company of the Beneficial Owner
Thereof
(1) A shareholder shall, immediately but not later than within
two weeks upon receipt of a request of the executive board,
notify the company of the beneficial owner thereof who exercises
control through the shareholder (hereinafter in this Section -
the beneficial owner).
(2) If a shareholder fails to submit the required information
to the company within the term specified in Paragraph one of this
Section:
1) the shareholder shall have no voting rights, and, when
determining the norm of representation, the votes of the
respective shareholder shall not be taken into account;
2) the company shall not pay out any dividends to the
shareholder.
(3) If the executive board has not submitted the information
provided by a shareholder about the beneficial owner to the
Commercial Register Office in accordance with the procedures and
within the term laid down in the law, the relevant information
can be submitted to the Commercial Register Office by the
shareholder.
(4) If the Commercial Register Office registers the beneficial
owner on the basis of the application of a shareholder, the
restrictions specified in Paragraph two of this Section shall be
void.
(5) A court may exclude a shareholder from the company on the
basis of a request of the company if the shareholder has failed
to submit to the company the notice referred to in Paragraph one
of this Section and has failed to submit to the Commercial
Register Office the application referred to in Paragraph four of
this Section.
(6) If a shareholder is excluded, his or her shares shall
transfer to the company which has the obligation to disburse the
excluded shareholder his or her contribution determined in
accordance with the provisions of Section 156, Paragraph two of
this Law.
[16 June 2022]
Section 137. Limitations of the
Liability of the Company
(1) The company shall be liable for its commitments with the
whole of its property.
(2) The company shall not be liable for the commitments of a
shareholder.
(3) A shareholder shall not be liable for the commitments of
the company.
Section 138. Company with
Supplemental Liability
(1) The company may be founded as the company with
supplemental liability in which at least one of the shareholders
is liable personally with the whole of their property for the
commitments of the company.
(2) In the documents of incorporation of the company with
supplemental liability, all persons who are liable personally for
the commitments of the company with the whole of their property
shall be indicated. These persons shall be entered in the
Commercial Register.
Section 139. Legal Address of the
Company
(1) The address entered in the Commercial Register shall be
the legal address of the company. If the legal address changes,
the executive board shall submit an application to the Commercial
Register Office for making the relevant entry.
(2) The executive board shall specify in the application the
legal address of the company, including the cadastral designation
of the immovable property object (building, residential property
or premises), and certify that the company is reachable and it
has legal basis to be at the specified legal address.
[16 March 2006; 16 June 2011; 6 July 2021]
Chapter
1.1
Restrictions for the Conclusion of a
Transaction with the Founder, Shareholder, Member of the
Executive Board or Supervisory Board of the Company and Related
Person
[15 June 2017]
Section 139.1 Person
Related to the Founder of the Company, Shareholder, Member of the
Executive Board or Supervisory Board
[15 June 2017]
Section 139.2 Conclusion
of a Transaction with the Founder, Shareholder or Related
Person
[15 June 2017]
Section 139.3 Conclusion
of a Transaction with a Member of the Executive Board,
Supervisory Board or Related Person
[15 June 2017]
Chapter 2
Founding of Companies
Section 140. Founders of the
Company
(1) The founder of the company shall be a natural person,
legal person or partnership which has performed the activities
for the founding of the company or on whose behalf the founding
activities have been performed.
(2) The company may be founded by one or several founders.
[22 April 2004]
Section 141. Procedures for the
Founding of the Company
(1) When founding the company, founders shall perform the
following activities:
1) draw up and sign the documents of incorporation of the
company in accordance with Section 142 of this Law;
2) establish the administrative bodies of the company and, if
it is intended in the company, appoint an auditor;
3) pay up the equity capital and organise the deposit of the
cash of the founders into the payment account;
4) organise the valuation of property contributions (if
property contributions are made);
41) record the dematerialised stocks of a
joint-stock company in the central securities depository if the
articles of association provide for the registration of stocks in
accounts;
5) pay the State fee for entry in the Commercial Register;
6) submit an application to the Commercial Register
Office.
(2) The founders may request an inspection of the founding of
the company in the cases and according to the procedures laid
down in Section 150 of this Law.
(3) Unless the memorandum of association provides otherwise,
the founders shall jointly perform the activities associated with
the founding of the company.
[16 March 2006; 15 April 2010; 6 July 2021; 16 June
2022]
Section 142. Documents of
Incorporation of the Company
(1) The memorandum of association and the articles of
association are the documents of incorporation of the
company.
(2) The conditions in the documents of incorporation may vary
from the provisions of the law only when the law explicitly
permits such variance.
Section 143. Memorandum of
Association
(1) The following shall be indicated in the memorandum of
association:
1) information on the founders:
a) for a natural person - the given name, surname, personal
identity number (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document), and the address where he or she can be
reached;
b) for a legal person - the name, registration number, legal
address, and also the given name, surname, personal identity
number (if the person does not have a personal identity number -
the date of birth, the number and date of issue of a personal
identification document, the country and authority which issued
the document), and position of the representative thereof who
signs the memorandum of association in the name of the legal
person;
2) the firm name of the company;
3) the amount of the equity capital of the company, the number
and nominal value of shares;
4) the amount of equity capital to which each founder has
subscribed, the procedures and terms for payment;
5) the number of shares due to each founder according to the
part of the equity capital such founder has subscribed to;
6) the number and sum of nominal values of shares which, when
founding the company, are paid-up with a property contribution,
indicating each property contribution item and the given name,
surname, personal identity number (if the person does not have a
personal identity number - the date of birth, the number and date
of issue of a personal identification document, the country and
authority which issued the document) of each person who
undertakes commitments to make the property contribution;
61) the name, registration number, and legal
address of the central securities depository in which the
dematerialised stocks will be recorded;
7) the allowed amount of founding expenditures and the
procedures for their covering;
8) any special obligations, rights or advantages which have
been granted during the founding of the company to a person who
has taken part in the founding of the company;
9) the given names, surnames, and personal identity numbers of
the members of the executive board of the company (if the person
does not have a personal identity number - the date of birth, the
number and date of issue of a personal identification document,
the country and authority which issued the document);
10) the given names, surnames, and personal identity numbers
of the members of the supervisory board of the company (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document) if
the company has a supervisory board;
11) the given name, surname, and personal identity number of
the auditor (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document) if the company is intended to have an
auditor;
12) other provisions which the founders consider to be
significant and which are not in contradiction to law.
(2) The memorandum of association shall be signed by all
founders.
(3) The memorandum of association shall be in effect until the
proper fulfilment of the commitments specified therein and until
the expiry of the term of powers of the supervisory board and
executive board of the company indicated therein in accordance
with the provisions of Section 145, Paragraph two of this
Law.
(4) [14 February 2002]
(5) If the company is founded by one founder, he or she shall
draw up and sign the decision to found the company in the place
of the memorandum of association. The provisions of this Law
which govern the memorandum of association shall also apply to
the decision to found the company.
[14 February 2002; 22 April 2004; 16 March 2006; 15 April
2010; 16 June 2022]
Section 144. Articles of
Association
(1) The following shall be indicated in the articles of
association of the company:
1) the firm name of the company;
2) [22 April 2004];
3) the term or objective of the activities of the company (if
the company is founded for a specific period or to reach a
specific objective);
4) the amount of the equity capital, the number and nominal
value of shares;
41) if the company has different categories of
shares - the categories of shares (indicating the rights which
arise from each category of shares) and the number and nominal
value of each category of shares;
5) [14 February 2002];
6) the right of the members of the executive board of the
company to individually or jointly represent the company;
61) numerical composition of the executive board
(if such is intended);
7) the number of the members of the supervisory board of the
company (if a supervisory board is intended for the company);
8) special provisions for the alienation of shares (if such
are provided for);
9) other provisions which the founders consider to be
significant and which are not in contradiction to law.
(2) In addition to the information referred to in Paragraph
one of this Section, the following shall be indicated in the
articles of association of a joint-stock company:
1) [17 December 2020];
2) whether the stocks are registered or dematerialised;
3) [16 June 2022];
4) the main types of commercial activities of the company.
(3) When founding the company, the articles of association
shall be signed by all founders, indicating the date of
signing.
[14 February 2002; 22 April 2004; 24 April 2008; 15 June
2017; 17 December 2020; 16 June 2022]
Section 145. Establishment of
Administrative Bodies of the Company and the Appointment of an
Auditor
(1) The restrictions specified by law shall be applicable also
to the members of the executive board and supervisory board and
an auditor who is appointed under the memorandum of
association.
(2) The term of powers of the executive board, the supervisory
board and the auditor of the company which has been established
until the registration of the company shall expire as of the
establishment of the new executive board and supervisory board
and the appointment of an auditor at the meeting of shareholders
accordingly.
[22 April 2004; 16 March 2006]
Section 146. Equity Capital
Subscribed and Paid until the Submission of the Registration
Application
(1) The founders shall subscribe to and pay up all the equity
capital specified in the memorandum of association until the
submission of the registration application, unless the memorandum
of association lays down an earlier time limit for the payment of
the equity capital.
(2) Until submission of the registration application, the
paid-up equity capital of a joint-stock company and the limited
liability company referred to in Section 185.1,
Paragraph one of this Law shall be paid up only with money.
[16 June 2022]
Section 147. Procedures for the
Payment of Equity Capital when Founding the Company
(1) The founders shall open a payment account in the name of
the company to be founded, organise deposit of money therein, and
receive from the payment service provider a statement addressed
to the Commercial Register Office or another document issued by
the payment service provider which confirms the payment of the
equity capital.
(2) Founding expenditures of the company shall be covered in
proportion to the amount of the subscribed equity capital of each
founder, unless the memorandum of association provides for other
procedures for covering founding expenditures.
[16 June 2022]
Section 148. Valuation of Property
Contributions
If the equity capital or a part thereof is paid up with a
property contribution when founding the company, the founders
shall organise its valuation in accordance with the provisions of
Section 154 of this Law.
Section 149. Application for
Entering in the Commercial Register
(1) The foundation of the company shall be applied for
entering in the Commercial Register.
(2) All founders shall sign the application.
(3) The following shall be attached to an application:
1) the documents of incorporation;
2) a statement or another document of the payment service
provider regarding the payment of the equity capital (if the
equity capital or a part thereof is paid in cash);
3) the documents which certify the value of each property
contribution (if property contributions are made);
4) a written consent of each member of the supervisory board
to be a member of the supervisory board (if the company has the
supervisory board);
5) a written consent of each member of the executive board to
be a member of the executive board. If the firm name of the
company changes until its entry in the Commercial Register, a
written consent need not be resubmitted;
6) [15 April 2010];
7) the notice of the executive board on the legal address of
the company, including the cadastral designation of the immovable
property object (building, residential property or premises), and
certification that the company is reachable and it has legal
basis to be at the specified legal address;
8) [16 March 2006];
9) the first division of the register of shareholders
(stockholders);
10) a certification issued by the central securities
depository on the recording of dematerialised stocks.
[14 February 2002; 22 April 2004; 16 March 2006; 15 April
2010; 16 June 2011; 2 May 2013; 15 June 2017; 6 July 2021; 16
June 2022]
Section 150. Inspection of the
Founding of the Company
(1) Shareholders who represent not less than one twentieth of
the equity capital have the right to, within one year from the
date of registration of the company, request the Commercial
Register Office to approve one or several experts selected by
shareholders to inspect the founding of the company.
(2) The experts shall draw up a report on the inspection in
three copies of which one copy shall be submitted to the
Commercial Register Office, the second - to the company, but the
third - to the shareholders who requested the inspection.
(3) The shareholders who requested the inspection shall cover
the costs of the inspection.
(4) If it is established in the inspection of the founding of
the company that the founders have not fulfilled their
obligations in good faith, the founders shall compensate the
costs of the inspection of the founding of the company to the
shareholders referred to in Paragraph three of this Section.
Disputes over expenditures which are associated with the
inspection of the founding of the company shall be decided by a
court.
[14 February 2002; 16 March 2006]
Chapter 3
Equity Capital of the Company
Section 151. Payment of Equity
Capital and Types of Payments
(1) Equity capital shall be paid in cash or property
contribution.
(2) Equity capital shall be expressed in euros.
(3) The type of payment shall be specified in the memorandum
of association or in the regulations for increasing the equity
capital.
(4) Contributed property shall become the property of the
company.
[19 September 2013 / Amendments to Paragraph two
shall come into force on 1 January 2014. See Paragraph 35
of Transitional Provisions]
Section 152. Payment of Equity
Capital in Cash
(1) If the memorandum of association or regulations for
increasing the equity capital do not provide for a property
contribution, the equity capital shall be paid only in cash.
(2) The contribution in cash specified in Paragraph one of
this Section may not be substituted with a property
contribution.
Section 153. Property
Contributions
(1) A tangible or intangible property which can be valued in
monetary terms and may be used in the commercial activities of
the company, except for property against which recovery may not
be directed in accordance with law may be the property
contribution item.
(2) Commitments to provide services or to perform work,
expected profits or intended activities of the company, or also
the expected work remuneration, fees, dividends and similar
payments which a founder or shareholder may receive from the
company may not be the property contribution item.
(3) Property contributions may not be made in parts.
(4) A person who makes a property contribution shall notify of
any rights of third parties to the property contribution item. If
the person fails to fulfil this requirement, he or she shall pay
for their shares in cash.
(5) If the value of a property contribution item has decreased
until the submission of the application to the Commercial
Register Office, the person who has contributed it shall cover
this decrease in cash.
(6) [22 April 2004]
[22 April 2004]
Section 154. Procedures for the
Valuation of Property Contributions
(1) Property contributions shall be evaluated and an opinion
thereon shall be provided by a person who is included in the list
of the valuators of property contributions. A valuator may not be
a relative of the owner of the property to be valuated up to the
third degree of kinship, a spouse and brother-in-law or
sister-on-law up to the second degree of affinity, and also a
person who is otherwise interested in the valuation of the
property.
(11) The procedures for keeping the list of the
valuators of property contributions and the requirements to be
brought forward for valuators shall be determined by the
Cabinet.
(2) If the total value of property contributions does not
exceed EUR 5700 and the property contributions together are less
than one-half of the equity capital of the company when founding
a limited liability company, the property contributions may be
valued and an opinion may be provided by the founders. In this
case, all founders shall sign the opinion.
(21) If the equity capital is paid with
transferable securities and money market instruments which have
been admitted to trading on a regulated market registered
(licensed) in a Member State for at least two years before the
signing of the memorandum of association or taking the decision
to increase the equity capital, an opinion on the valuation of
the property contribution may be provided by those founders or
shareholders who are making the relevant property
contribution.
(3) The property contributions shall be valued according to
the usual value of the relevant property or right.
(31) If the equity capital is valued in accordance
with the procedures specified in Paragraph 2.1 of this
Section, the value of transferable securities and money market
instruments shall be determined based on the weighted average
price in a regulated market within six months before the
valuation.
(32) The opinion on the valuation of a property
contribution shall be in effect for six months from the date of
the drawing up thereof. The opinion on the valuation of a
property contribution must also be in effect on the day when the
memorandum of association is signed or the decision to increase
the equity capital is taken.
(33) The executive board has the obligation to
ensure a re-valuation of a property contribution in accordance
with the provisions of Paragraph one of this Section, if the such
circumstances which would decrease the value of the property
contribution until the moment when the application for entering
the company in the Commercial Register or application for
increasing the equity capital will be submitted to the Commercial
Register Office are revealed.
(34) If the executive board does not provide a
re-valuation of the property contribution in the case referred to
in Paragraph 3.3 of this Section, shareholders who
represent at least one twelfth of the equity capital on the day
of taking the decision to increase the equity capital have the
right to, until the day when the application for increasing the
equity capital will be submitted to the Commercial Register
Office, request the re-valuation of the property contribution in
accordance with the provisions of Paragraph one of this
Section.
(4) An opinion on the valuation of a property contribution
shall include a description and value of each contribution item,
indicate the ownership of the property, and the methods used for
the valuation of each contribution, and include an opinion on the
conformity of the property contribution item with the types of
commercial activities of the company. If the valuation is carried
out by the founders or shareholders, the valuation methods of
property contributions need not be indicated. The information
used as the basis for determining the value of property
contribution shall be additionally indicated in the opinion on
the valuation of the property contribution referred to in
Paragraph 2.1 of this Section which is drawn up by the
founders or shareholders.
(5) [6 July 2021]
(6) The persons who carried out the valuation shall be jointly
liable for any losses which have been caused by an incorrect
valuation of a property contribution.
[14 February 2002; 22 April 2004; 24 April 2008; 15 April
2010; 29 November 2012; 19 September 2013; 6 July 2021; 11 May
2023]
Section 155. Payment for a Share
(1) A founder or shareholder shall have the obligation to pay
for the share according to its nominal value.
(2) The regulations for increasing the equity capital may
provide that, in the case of the equity capital of the company
being increased, a shareholder shall have to, in addition to the
nominal value, also pay the share premium. The share premium
shall be indicated in the regulations for increasing the equity
capital, and it shall not be included in the equity capital.
Section 156. Consequences of the
Failure to Comply with the Term for Paying for a Share
(1) If a person fails to pay the full subscribed price of the
share within the term for the full payment of shares as specified
in the memorandum of association or regulations for increasing
the equity capital, the executive board shall send him or her a
written notice thereon by appropriate means. The notice shall
indicate the term for the repeated full payment of shares
specified by the executive board which may not be shorter than 15
days or longer than 30 days from the date when the notice is
sent.
(2) If a person fails to pay for a share within the term
specified by the executive board which is referred to in
Paragraph one of this Section, he or she shall forfeit the right
to this share, which shall transfer to the company. When the new
owner of the share has paid its sales price, the company shall
withhold one-fifth of the sales price and disburse the remaining
amount to the relevant shareholder.
(3) The regulations for increasing the equity capital may
provide that, in case of failure to pay the full price of shares,
a shareholder shall keep the number of shares in proportion to
his or her paid amount, if the articles of association provide
so.
(4) If the amount which the company acquires by selling the
share acquired according to the procedures referred to in
Paragraph two of this Section is less than the amount which has
already been paid by the first owner of the share, the company
may request the difference from the first owner of the share.
(5) The memorandum of association, as well as the articles of
association may specify a contractual penalty for the failure to
comply with the term for the payment of shares. The amount to be
withheld referred to in Paragraph two of this Section shall not
be deemed to be a contractual penalty within the meaning of this
Paragraph.
[14 February 2002]
Section 157. Rights of Several
Persons to a Share
(1) In the company, one share may be owned by several persons
jointly. These persons may exercise the rights arising from this
share only by appointing a joint representative.
(2) [2 May 2013]
(3) Persons who jointly own one share in the company shall be
jointly liable for the commitments arising from this share.
[14 February 2002; 2 May 2013]
Section 158. Mandatory Reserves
[14 February 2002]
Section 159. Use of the Mandatory
Reserves
[14 February 2002]
Section 160. Other Reserves
[14 February 2002]
Section 161. Dividends
(1) [14 February 2002]
(11) Dividends shall be determined by a decision of
shareholders.
(2) Dividends shall be paid out to a shareholder in proportion
to the sum of the nominal values of the shares owned by him or
her, unless the articles of association provide different
procedures for the distribution of dividends.
(3) Dividends shall be calculated and paid out for fully paid
shares.
(4) Dividends may not be determined, calculated and paid out
if it arises from the annual statement or from the report on
economic activity referred to in Section 161.1 of this
Law that the own funds of the company are less than the equity
capital.
(5) Dividends shall be paid out only in cash based on the
decision on the division of profit.
(6) Dividends which have not been taken out within 10 years
shall transfer into the ownership of the company, except when,
pursuant to law, the limitation period is deemed to be
discontinued or suspended. Interest shall not be paid on
dividends which have not been taken out in time, if this is due
to the fault of the shareholder.
(7) The decision of the shareholders of the company that the
dividends, even temporarily, are to be left at the disposal of
the company shall be void.
(8) The company may not request a shareholder to return the
dividends received, except in the cases referred to in Section
162 of this Law.
[14 February 2002; 22 April 2004; 2 May 2013; 16 January
2014; 11 May 2023]
Section 161.1
Extraordinary Dividends
(1) It may be stipulated in the articles of association that
dividends may be determined and calculated also from the profit
acquired during the period after the end of the previous
reporting year (within the meaning of this Section - the
extraordinary dividends). In this case, the provisions of this
Law for the determination, calculation and payment of dividends
shall be applied, insofar as this Section does not provide
otherwise.
(2) A condition or time limit shall be stipulated in the
articles of association upon the setting in of which a deadline
is to be determined by which the executive board shall convene a
meeting of shareholders in order to take the decision to
determine extraordinary dividends. The executive board shall not
convene a meeting of shareholders if the company has no profit in
accordance with the report on economic activity which has been
drawn up for the extraordinary dividend payment period. Other
cases may be provided in the articles of association when the
executive board shall not convene a meeting of shareholders in
order to take the decision to determine extraordinary
dividends.
(3) [16 June 2022]
(4) The executive board shall draw up and submit to the
meeting of shareholders a report on economic activity of the
company for the period for which extraordinary dividends are
determined and a proposal for the part of the profit to be paid
out in extraordinary dividends. The meeting of shareholders
cannot determine a greater part of profit to be paid out in
extraordinary dividends than that determined in the proposal of
the executive board for the part of the profit to be paid out in
extraordinary dividends.
(5) The report on the economic activity of the company shall
be drawn up in accordance with the requirements of the law on
drawing up the annual statement. The company shall, in accordance
with procedures laid down in Sections 214 and 273.1 of
this Law, ensure that shareholders have access to the report on
economic activity and the proposal of the executive board for the
profit share to be paid out in extraordinary dividends.
(6) The meeting of shareholders shall take the decision to
determine extraordinary dividends:
1) not earlier than three months after the previous decision
of the meeting of shareholders to determine dividends has been
taken;
2) not later than three months after the end of the reporting
period on which the report on economic activity of the company
has been drawn up.
(7) In the meeting of shareholders, the executive board shall
certify that:
1) the financial situation of the company has not
significantly deteriorated until the day of the meeting of
shareholders;
2) paying out of extraordinary dividends does not pose a risk
to the fulfilment of the commitments of the company in the
remaining months of the reporting year.
(8) According to the provisions of this Section, dividends may
be determined and paid out, if on the day of taking the decision
of the meeting of shareholders:
1) the company has no tax debts;
2) the company has no tax payments deferred or divided in
periods, and the advance tax payments to be made by the company
have not been reduced.
(9) A limited liability company which conforms to the
provisions of Section 185.1, Paragraph one of this Law
may not determine and pay out extraordinary dividends.
[16 January 2014; 16 June 2022]
Section 162. Return of Improperly
Disbursed Amounts
(1) If a dividend to which or a part of which a person had no
right has been paid out to such person and this person was aware
or should have been aware at the time of receipt of the dividend
that the payment was improper, this person has the obligation to
repay the improperly acquired amount to the company.
(2) A shareholder has the obligation to repay other improperly
disbursed amounts which he or she has acquired from the company
in good faith when he or she has become aware that the
disbursement was improper. A shareholder has the obligation to
repay the company the improperly disbursed amounts which he or
she has acquired from the company in bad faith or by gross
negligence. In such case, the shareholder shall compensate the
losses which were incurred by the company as a result of this
improper disbursement.
Chapter 4
Liability
Section 163. Liability for
Commitments which have Arisen before Entering the Company in the
Commercial Register
(1) A founder who has acted in the name of the company to be
founded before entering the company in the Commercial Register
shall be liable for the commitments arising from such actions. In
the case of actions by several founders, these founders shall be
liable jointly.
(2) Arrangements which are contrary to the provisions of
Paragraph one of this Section shall be void as to third
parties.
(3) The commitments referred to in Paragraph one of this
Section shall transfer to the company, if the executive board of
the company or shareholders who represent not less than one
twentieth of the equity capital do not object to the transfer of
these commitments to the company within three months after
entering the company in the Commercial Register. If such
objections are raised, the issue of the transfer of commitments
shall be decided by the meeting of shareholders. The transfer of
commitments to the company shall not restrict its rights to
request the fulfilment of the commitments from the founders.
(4) If the property of the company is not sufficient to
satisfy the claims of creditors of the company, the founders
shall be jointly liable towards the creditors for the commitments
of the company to the extent of that reduction in the property of
the company which has arisen from the commitments which have been
undertaken by the company to be founded. The limitation period
for such claims shall expire within three years from the date
when the company was entered in the Commercial Register.
[14 February 2002]
Section 164. Acquisition of Property
from Founders and Shareholders
[16 June 2005]
Section 165. Liability for
Submitting False Information
(1) Founders of the company shall be jointly liable for such
losses caused as a result of false information which has been
provided until the entry of the company in the Commercial
Register.
(2) Members of the executive board shall be jointly liable for
such losses caused as a result of false information which has
been provided after entry of the company in the Commercial
Register.
(3) For the submission of false information to the Commercial
Register, the respective persons shall be held to administrative
or criminal liability.
Section 166. Liability of
Founders
(1) Founders shall be jointly liable towards the company and
third parties for the losses caused during the founding of the
company as a result of the founders having acted maliciously or
negligently.
(2) Actions which are in contradiction to law or the
memorandum of association shall be in any case deemed to be
malicious.
(3) Founders shall be jointly liable towards the company for
any shortages which have been caused if a person is unable to
fulfil their share payment commitments in cases when these
founder were aware or should have been aware of the inability of
this person to fulfil such obligations when accepting the
participation of such person.
(4) The provisions of this Section shall not in any way limit
the liability specified in Section 163 of this Law.
(5) The limitation period for the claims referred to in this
Section shall expire within five years from the date when the
company was entered in the Commercial Register.
Section 167. Liability of Third
Parties for Violations of Founding Process
(1) A person who has facilitated the malicious or negligent
actions of the founders or has collaborated in them shall be
jointly liable together with the guilty founders if he or she was
aware or should have been aware of the malicious or negligent
character of such actions.
(2) A person on whose account a founder has undertaken the
obligation to pay for the shares shall also be jointly liable
with the founders. Such person may not rely on not being aware of
such circumstances of which the founder was aware or should have
been aware.
(3) The limitation period for the claims referred to in this
Section shall expire within five years from the date the company
was entered in the Commercial Register.
Section 168. Liability for
Influencing Members of a Body of the Company, Procurators and
Persons with a Commercial Power of Attorney
(1) A person who persuades a member of the executive board or
supervisory board, a procurator or a person with a commercial
power of attorney in bad faith to act against the interests of
the company or its shareholders shall be liable for any losses
caused to the company as a result of such activities.
(2) If there are grounds to hold a member of the executive
board or supervisory board liable according to Section 169 of
this Law in the case referred to in Paragraph one of this
Section, he or she shall be jointly liable with the person who
has exerted his or her influence. If there are grounds to hold a
procurator or a person with a commercial power of attorney
liable, they shall be jointly liable with the person who has
exerted his or her influence.
(3) Members of the executive board and supervisory board, a
procurator or a person with a commercial power of attorney shall
not be liable in accordance with Paragraph two of this Section if
they prove that they were acting as respectable and accurate
managers.
(4) The provisions referred to in Paragraphs one and two of
this Section shall not be applicable if the influence has been
exerted:
1) by exercising one's voting rights at the meeting of
shareholders;
2) by legally exerting one's decisive influence in accordance
with the Group of Companies Law.
[14 February 2002; 22 April 2004]
Section 169. Liability of Members of
the Executive Board and Supervisory Board
(1) Members of the executive board and supervisory board shall
fulfil their obligations as would a respectable and accurate
manager.
(2) Members of the executive board and supervisory board shall
be jointly liable for the losses which they have caused to the
company.
(3) A member of the executive board and supervisory board
shall not be liable in accordance with Paragraph two of this
Section if he or she proves that he or she has acted as a
respectable and accurate manager.
(4) A member of the executive board and supervisory board
shall not be liable for the losses caused to the company if he or
she has acted in good faith within the framework of a lawful
decision of the meeting of shareholders. The fact that the
supervisory board has approved the actions of the executive board
shall not release the members of the executive board from
liability towards the company.
(5) The limitation period for claims against a member of the
executive board and supervisory board shall expire within five
years form the day of causing losses.
[14 February 2002; 22 April 2004; 15 June 2017]
Section 169.1 Liability
of the Members of the Executive Board for the Violation of
Provisions for Keeping the Register of Shareholders
(1) A member of the executive board shall be liable for the
losses caused to a shareholder, alienor of a share, or acquirer
of a share which have arisen due to the member of the executive
board violating the provisions of Sections 187, 187.1,
234, and 235 of this Law.
(2) If in the case referred to in Section 187.1,
Paragraph three, and Section 235.1, Paragraph three of
this Law the executive board fails to make an entry in the
register of shareholders or fails to submit a division of the
register of new shareholders to the Commercial Register Office
within the term and in accordance with the procedures laid down
in the law, the relevant persons shall be held administratively
liable.
[2 May 2013; 15 June 2017; 16 June 2022]
Section 170. Claim of a Creditor for
the Benefit of the Company
(1) A creditor of the company who cannot achieve satisfaction
of its claim from the company may, within a year from the day of
entry into effect of the judgement, bring an action for the
benefit of the company against the persons referred to in
Sections 166-169 of this Law who have caused losses to the
company and have not compensated them.
(2) Creditors of the company have the right to bring an
action, and this right shall not be restricted also in the cases
when:
1) the company has withdrawn its action against the person at
fault;
2) a settlement has been entered into;
3) the losses have been caused while enforcing the decision of
the meeting of shareholders or supervisory board.
(3) [15 June 2017]
[14 February 2002; 15 June 2017]
Section 171. Prohibition of
Competition in Relation to Members of the Executive Board of the
Company
(1) A member of the executive board may not, without the
consent of the supervisory board or, if such has not been
established, without the consent of the meeting of
shareholders:
1) be a general partner in a partnership or a shareholder with
supplemental liability in a capital company which is engaged in
the field of commercial activities of the company;
2) conclude transactions in the field of commercial activities
of the company in his or her own name or in the name of a third
party;
3) be a member of the executive board of another company which
is engaged in the field of commercial activities of the company,
except when the company and the other company are part of the
same group of companies.
(2) If a member of the executive board violates the provisions
of Paragraph one of this Section, the company is entitled to
request compensation for losses or the recognition of the
relevant transactions as such that are concluded in the name of
the company, and the transfer the income acquired or the right of
claim to such to the company.
(3) The limitation period for the claims referred to in
Paragraph two of this Section shall expire within three months
from the date when the rest of the members of the executive board
or supervisory board (if such has been established) have become
aware of a violation of the prohibition of competition, but not
later than five years from the day of committing the
violation.
[14 February 2002]
Section 172. Bringing an Action by
the Company
(1) The company shall bring an action against the founders,
members of the executive board or supervisory board or the
auditor on the basis of the decision of the meeting of
shareholders which has been taken by a simple majority of the
votes of those present. The articles of association may not
specify a higher majority of votes for bringing an action.
(2) The company has the obligation to bring an action against
the persons referred to in Paragraph one of this Section also if
that is requested by the minority of shareholders which jointly
represents not less than one twentieth of the equity capital or
the participation of which in the equity capital is not less than
EUR 100 000. Such request of the minority of shareholders shall
be submitted to that body of the company which has the right to
bring an action in accordance with this Law, but if such body
does not bring the action to a court within one month, the
minority of shareholders may bring an action to a court without
the intermediation of this body within the time limit specified
in Paragraph six of this Section.
(3) An action of the company against the executive board shall
be brought and maintained by the supervisory board. If the
company has no supervisory board, then the meeting of
shareholders which decides on the bringing of an action against
the members of the executive board shall elect one or several
representatives of the company to bring and maintain the
action.
(4) An action of the company against the founders, the
supervisory board and the auditor shall be brought and maintained
by the executive board if the meeting of shareholders does not
decide otherwise.
(5) If the bringing of an action is requested by the minority
of shareholders, a court shall allow the persons selected by them
as representatives of the company in the examination of the case,
if there is an important reason for this. In any event, the case
referred to in Paragraph two of this Section when the relevant
body, despite the request of the minority of shareholders, does
not bring an action to a court shall be deemed to be an important
reason.
(6) An action shall be brought to a court within three months
from the date when the meeting of shareholders has taken the
decision to bring a claim or when a request of the minority of
shareholders has been received. An appropriately certified
excerpt of the minutes of the meeting shall be appended to the
action. When bringing an action to a court, the minority of
shareholders has the obligation to attach evidence that these
shareholders represent not less than one twentieth of the equity
capital of the company or that the participation thereof in the
equity capital of the company is not less than EUR 100 000, and
also a relevant authorisation of the minority of
shareholders.
(7) For losses which have been incurred by the company due to
an unjustified action, those shareholders who voted for the
bringing of the action or the minority of shareholders in the
actions of which malicious intent or gross carelessness has been
established shall be jointly liable.
(8) [14 February 2002]
[14 February 2002; 19 September 2013; 15 June 2017; 11 May
2023]
Section 173. Release from
Liability
(1) The meeting of shareholders may release members of the
executive board or supervisory board from liability or take the
decision to enter into an amicable settlement only for specific
actions which were actually taken by them and revealed at the
meeting of shareholders, and as a result of which the company has
incurred losses.
(2) The decision of the meeting of shareholders to release
members of the executive board or supervisory board from
liability or enter into an amicable settlement shall not restrict
the right of the minority of shareholders to bring an action in
accordance with the provisions of Section 172, Paragraph two of
this Law.
(3) The decision of the meeting of shareholders to approve the
annual statement shall not of itself release members of the
executive board and supervisory board from liability for their
actions during the relevant reporting period.
[14 February 2002]
Chapter 5
Annual Statement of the Company and Distribution of Profits
Section 174. Statement of the
Company
(1) After expiry of the reporting year, the executive board
shall draw up and sign the annual statement of the company and
submit it without delay to the auditor and supervisory board (if
such has been established).
(2) After receipt of the opinion of an auditor and the report
of the supervisory board, the executive board shall convene the
meeting of shareholders.
(3) If the company does not have a supervisory board, the
executive board shall convene the meeting of shareholders after
receipt of the opinion of an auditor.
(4) The company shall, in accordance with the procedures laid
down in Sections 214 and 273.1 of this Law, ensure
that shareholders have access to the annual statement, opinion of
an auditor, and report of the supervisory board.
[22 April 2004; 16 June 2022]
Section 175. Report of the
Supervisory Board to the Meeting of Shareholders
(1) If the company has a supervisory board, it shall examine
the annual statement and proposals for the use of profit
submitted by the executive board and shall draw up a written
report thereon which shall be attached to the annual
statement.
(2) The report shall also include:
1) an evaluation of the activities and financial circumstances
of the company;
2) an evaluation of the work of the executive board;
3) a report on the work of the supervisory board in the
reporting period;
4) proposals for the improvement of the activities of the
company, if it is necessary.
[22 April 2004]
Section 176. Auditor
(1) The annual statement of the company shall be reviewed and
an opinion thereon shall be provided by a sworn auditor elected
in the meeting of shareholders, if it is provided by the law. In
other cases, the annual statement shall be reviewed and an
opinion thereon shall be submitted by an auditor, if so provided
by the articles of association or the decision of the meeting of
shareholders.
(2) The provisions of this Law for an opinion of an auditor on
the annual statement shall be applicable if Paragraph one of this
Section provides for an auditor at the company.
(3) [16 March 2006]
(4) An auditor may not be a shareholder, a member of the
executive board or supervisory board of the company itself, and
also a person who is otherwise interested in the commercial
activities of the company. If the company is part of a group of
companies, the auditor may not be also a person who is a member
of the executive board or supervisory board of a dependent
company or the dominant undertaking.
(5) The executive board, supervisory board or shareholders who
represent not less than one tenth of the equity capital may,
during a meeting of shareholders or not later than two months
after the meeting of shareholders, raise substantiated objections
against the elected auditor. Objections raised at a meeting of
shareholders shall be immediately decided by the meeting itself,
but if such objections are raised later, the contested issue
shall be decided by the meeting of shareholders to be convened
not later than within two months after the objections have been
received by the executive board. If the objections are rejected,
the shareholders representing not less than one tenth of the
equity capital who raised them have the right to invite another
auditor at their own expense. When another auditor is invited,
the status and scope of the rights of the elected auditor shall
not change.
(6) The auditor invited in accordance with the procedures
specified in Paragraph five of this Section has the same rights
as the elected auditor, and the same provisions of the law shall
be applicable to him or her.
[14 February 2002; 16 March 2006]
Section 177. Obligations and Rights
of an Auditor
The obligations and rights of an auditor shall be determined
by the relevant laws.
Section 178. Liability of an
Auditor
(1) An auditor shall be liable towards the company and third
parties for any losses caused due to his or her fault.
(2) An auditor shall not be liable for any losses caused as a
result of violations committed by the administrative bodies of
the company, except when he or she was aware or should have been
aware of such violations but failed to indicate them in the
opinion.
(3) If an auditor becomes liable in accordance with the
provisions of Paragraph two of this Section, he or she shall be
jointly liable together with the members of the relevant
administrative body.
Section 179. Approval of the Annual
Statement of the Company
(1) The annual statement of the company shall be approved by
the meeting of shareholders which has been convened by the
executive board after receipt of the auditor's opinion, but if
the company has a supervisory board, also after receipt of the
report of the supervisory board.
(2) The approval of the annual statement of the company at the
meeting of shareholders shall be postponed if the opinion of the
auditor invited in accordance with the procedures laid down in
Section 176, Paragraph five of this Law differs from the opinion
of the elected auditor.
(3) The approval of the annual statement of the company at the
meeting of shareholders shall be postponed if, by contesting the
correctness of separate items of the annual statement, the
postponement is requested by shareholders who represent at least
one tenth of the equity capital.
(4) If the approval of the annual statement is postponed in
the case referred to in Paragraph three of this Section, then the
minority of shareholders may, at the next meeting of shareholders
the agenda of which includes the approval of the annual statement
for the same year, request the repeated postponement of the
approval of the annual statement only if new circumstances which
pose an obstacle to the approval of the annual statement have
been established.
Section 180. Use of Company
Profit
(1) The executive board shall prepare and submit to a regular
meeting of shareholders its proposal for the use of profit.
(2) The company shall, in accordance with the procedures laid
down in Sections 214 and 273.1 of this Law, ensure
that shareholders have access to the proposal for the use of
profit.
(3) The following shall be indicated in the proposal:
1) the amount of the profit of the reporting year of the
company;
2) [14 February 2002];
3) [14 February 2002];
4) the part of the profit to be disbursed as dividends;
5) the use of profit for other purposes.
(4) The meeting of shareholders shall decide on the use of
profit after approval of the annual statement of the company.
(5) [14 February 2002]
(6) If the company has undistributed profits, shareholders
may, in accordance with the procedures specified in this Law,
request the executive board to convene a meeting of shareholders
in order to decide on the use of profit. The executive board
shall provide in the proposal for the use of the profit the
information referred to in Paragraph three of this Section and
shall, in accordance with the procedures laid down in Sections
214 and 273.1 of this Law, ensure that shareholders
have access to the proposal for the use of profit.
[14 February 2002; 2 May 2013; 16 January 2014; 16 June
2022]
Section 181. Submission of the
Annual Statement to the Commercial Register Office
(7) [24 April 2008 / See Paragraph 10 of Transitional
Provisions]
Section 182. Disbursement of the
Funds of the Company to Shareholders
(1) The company may make disbursements to its shareholders
only if dividends are disbursed or the equity capital is reduced,
or if the company is liquidated and its property is divided
between shareholders.
(2) Disbursements made to shareholders which are not referred
to in Paragraph one of this Section shall be deemed as
unjustified. Cases when a shareholder uses the property of the
company free of charge, when a higher remuneration than specified
in the contract has been disbursed to a shareholder for the
services provided, or when the company buys property from a
shareholder for an increased price shall also be regarded as
unjustified use of the funds of the company.
(3) Disbursements may not be made to shareholders if the own
funds of the company at the time of the closure of the reporting
year or, if the decision to determine extraordinary dividends has
been taken, at the end of the relevant reporting period are less
or, as a result of such disbursements, would become less than the
amount of the equity capital of the company. This condition shall
not apply to cases when the company is liquidated.
(4) The commitments referred to in Paragraphs one and three of
this Section shall not apply to disbursements to shareholders
towards which commitments have arisen otherwise than from
participation in the company.
[14 February 2002; 22 April 2004; 16 January 2014]
Amendments to Paragraph three shall come into force on 1 July
2014. See Paragraph 50 of Transitional Provisions]
Section 183. Special Review of the
Company
(1) The decision to carry out the special review of the
activities of the company as regards matters related to the
activities and financial status of the company, conclusion of a
transaction with a member of the executive board or supervisory
board, or a related person, and also in the cases where written
information has been received from a sworn auditor on the
deficiencies established by the sworn auditor in the operational
environment of the company (including the internal control
system) which can pose a corruption risk shall be taken by the
shareholders or the executive board, but, if the company has the
supervisory board, such decision may also be taken by the
board.
(2) Shareholders who represent no less than one twentieth of
the equity capital of the company may request the special review
if there is a significant reason for it.
(3) If the executive board does not agree to the special
review, it shall immediately convene a meeting of shareholders,
including in its agenda the matter of carrying out the special
review. If the meeting of shareholders rejects the request, the
minority of shareholders who represents not less than one
twentieth of the equity capital may elect a sworn auditor to
carry out the special review.
(4) The special review shall be carried out at the expense of
the company. If an auditor has been invited by the shareholders
themselves, the special review shall be carried out at the
expense of those shareholders.
(5) An auditor shall prepare an opinion on results of the
special review and submit it to the body of the company which
took the decision to carry out the special review or to the
minority of shareholders and the executive board.
[14 February 2002; 16 March 2006; 15 April 2010; 14 June
2012; 11 May 2023]
Section 184. Company Controller
[1 July 2023; 11 May 2023 / See Paragraph 82 of Transitional
Provisions]
Chapter 6
Transactions with Related Persons
[15 June 2017]
Section 184.1 Persons
Related to the Company
Within the framework of this Law, the following is meant by
the term "a person related to the company":
1) a shareholder of the company who has a direct decisive
influence in the company;
2) a member of the executive board or supervisory board;
3) a shareholder of the company who has a direct decisive
influence in the company, member of the executive board or
supervisory board;
4) a person who is a relative of the person referred to in
Clause 1 or 2 of this Section up to the second degree of kinship,
the spouse or brother-in-law or sister-in-law up to the first
degree of affinity, or a person with whom he or she has a shared
household;
5) a legal person in which the person referred to in Clause 1,
2 or 4 of this Section has a decisive influence.
[15 June 2017]
Section 184.2 Conclusion
of a Transaction with a Related Person
(1) Provisions of this Section apply to transactions which are
not concluded within the framework of usual commercial activities
or do not meet the market conditions. Provisions of this Section
shall not apply to the cases when a transaction is concluded in
accordance with a court ruling.
(2) If the company concludes a transaction with a related
person, the supervisory board or, if none, the meeting of
shareholders shall give a consent to the conclusion of the
transaction.
(3) Before concluding a transaction, the executive board shall
provide the following information on the transaction to the
supervisory board or meeting of shareholders:
1) the information on the related person with whom the
transaction is concluded;
2) the justification for the necessity of the transaction;
3) the provisions of the transaction;
4) the assessment of the impact of the transaction on the
commercial activity of the company and financial situation of the
company;
5) the assessment of the impact of the transaction on the
shareholders of the company who are not regarded to be related
persons in respect of the abovementioned transaction.
(4) If there is a conflict of interests between the company
and any member of the supervisory board or a person related to
him or her in the case referred to in Paragraph two of this
Section, the interested member of the supervisory board shall
have no voting rights, and it shall be entered in the minutes of
the meeting of the supervisory board.
(5) In the case referred to in Paragraph two of this Section,
also such member of the supervisory board who is a relative of
the interested member of the supervisory board up to the second
degree of kinship, the spouse or brother-in-law or sister-in-law
up to the first degree of affinity, or a person with whom he or
she has a shared household shall not have voting rights.
(6) If no member of the supervisory board has voting rights, a
consent for the conclusion of a transaction shall be given by the
meeting of shareholders.
(7) A transaction between the company and related person shall
not be in effect if the procedures for concluding a transaction
laid down in this Section are not complied with and the related
person was aware or should have been aware that a consent of the
supervisory board or meeting of shareholders is required and it
has not been provided.
(8) In addition to the provisions of this Section, a
transaction of one shareholder in the company between the company
and its shareholder shall be concluded in writing.
[15 June 2017]
Division
XII
LIMITED LIABILITY COMPANY
Chapter 1
Equity Capital and Shares
Section 185. Amount of Equity
Capital
The minimum amount of the equity capital of a limited
liability company (hereinafter in this Division - the company)
shall be EUR 2800.
[19 September 2013 / Amendments to the Section shall
come into force on 1 January 2014. See Paragraph 35 of
Transitional Provisions]
Section 185.1 Special
Provisions in Relation to the Amount of the Equity Capital
(1) The equity capital of the company may be less than the
minimum amount of the equity capital specified in Section 185 of
this Law if the company conforms all of the following
features:
1) the founders of the company are natural persons, and there
are not more than five of them;
2) the shareholders of the company are natural persons, and
there are not more than five of them;
3) the executive board of the company consists of one or
several members, and they all are shareholders of the
company;
4) each shareholder of the company is a shareholder of only
one such company the equity capital of which is less than that
specified in Section 185 of this Law.
(2) If the equity capital of the company is less than that
specified in Section 185 of this Law, it shall, each year, form a
mandatory reserve by making deductions in the amount of at least
25 per cent of the profit of the reporting year.
(3) The mandatory reserve, on the basis of a decision of the
meeting of shareholders, may be used:
1) for increasing the equity capital;
2) for covering the losses of the reporting year if they have
not been covered from the profit of the preceding reporting
year;
3) for covering the losses of the preceding reporting year if
they have not been covered from the profit of the reporting
year.
(4) If the equity capital of the company is less than that
specified in Section 185 of this Law, the proposal for the use of
the profit of the company made by the executive board thereof
shall, in addition to the information referred to in Section 180,
Paragraph three of this Law, include the amount of the deductions
to be made for formation of the mandatory reserve.
(5) If the equity capital of the company is less than that
specified in Section 185 of this Law, the company may pay out in
dividends the share of the profits of the reporting year that
remains after deductions in the mandatory reserve.
(6) If the equity capital of the company is less than that
specified in Section 185 of this Law and the company does not
conform to any of the features referred to in Paragraph one,
Clause 2, 3, or 4 of this Section, the company has the obligation
to increase the equity capital to the amount specified in Section
185 of this Law within three months from the moment when the
non-conformity with the relevant feature occurs.
(7) If the equity capital of the company is less than that
specified in Section 185 of this Law and the insolvency
proceedings of this company have been declared, its shareholders
shall be jointly liable for the commitments of the company the
total amount of which does not exceed the difference between the
amount of the equity capital specified in Section 185 of this Law
and the amount of the equity capital paid up by the founders.
[15 April 2010; 16 January 2014]
Section 186. Shares
(1) The nominal value of a share shall be determined by the
articles of association of the company. The nominal value of a
share may not be less than one cent. All shares of one category
shall have the same nominal value.
(2) A share shall be indivisible.
(3) A share gives a shareholder the right to take part in the
administration of the company, in the distribution of profit and
in the division of property in the case of the liquidation of the
company, as well as to other rights provided for by law and the
articles of association.
(4) Each share shall be assigned an individual, fixed sequence
number. The sequence number shall be assigned in the order of the
issue of shares.
[14 February 2002; 22 April 2004; 2 May 2013; 19 September
2013; 17 December 2020]
Section 186.1 Categories
of Shares
(1) Various rights arising from shares may be fixed in the
articles of association, including the right to receive
dividends, the right to receive liquidation quota and voting
rights at the meeting of shareholders.
(2) Shares in which an equal amount of rights is fixed are
shares of one category. If the company has several categories of
shares, each category of shares shall be given a different
designation.
(3) If the company has several categories of shares, the
decision to make amendments to the articles of association which
provide for amendment, restriction or revocation of the rights
granted to the relevant category of shares shall be taken if all
the holders of shares of the relevant category agree thereto,
unless the articles of association provide otherwise.
(4) If the consent of all of the holders of shares of the
relevant category is not required in the case referred to in
Paragraph three of this Section, the holder of shares of the
relevant category who voted against the decision referred to in
Paragraph three of this Section or did not take part in the
voting is entitled to request the company to repurchase his or
her shares within two months from the moment of taking the
decision or the moment when he or she became aware or should have
become aware of the decision taken. In such case, the provisions
of Section 353, Paragraph four, five, six, or seven of this Law
shall be applicable respectively.
[17 December 2020]
Section 187. Register of
Shareholders
(1) For the registration of shares and payment thereof, the
reflection of the transition of shares, and also the ensuring of
the rights of shareholders, the company shall keep a register of
shareholders.
(2) The register of shareholders is a file formed by separate
divisions. A division is a document that is formed by the
aggregate of entries made in one occasion which reflects the
complete current composition of shareholders.
(3) A division of the register of shareholders shall be drawn
up in two copies. One copy of the division shall be appended to
the register of shareholders, and the other shall be submitted to
the Commercial Register Office in accordance with the procedures
specified in this Law.
(4) The register of shareholders shall be stored for 10 years
after deletion of the company from the Commercial Register.
(5) The firm name, registration number, legal address and - in
the relevant cases - information on whether the company is
undergoing liquidation or insolvency proceedings, as well as the
title of the document "Division of the Register of Shareholders"
shall be indicated in each division of the register of
shareholders, and the following information shall be entered:
1) the sequence number and date of the division;
2) the sequence number of the entry, using continuous
numbering from the first division of the register of
shareholders;
3) sequence numbers of shares;
4) information on shareholders:
a) for a natural person - the given name, surname, personal
identity number (if the person does not have a personal identity
number - the date of birth, the number and date of issuance of a
personal identification document, the country and authority which
issued the document) and address where the person may be
reached;
b) for a legal person and partnership - the name, registration
number, and legal address;
5) the electronic mail address of the shareholder if the
shareholder has requested the company to use it for communication
with him or her;
6) the category of the shares of each shareholder (if the
company has several categories of shares), the number and nominal
value of shares, and the number of votes resulting from
shares;
7) the status of the payment of shares;
8) the joint representative of shareholders who has been
appointed in accordance with the procedures laid down in Section
157 of this Law, indicating the information referred to in
Clauses 4 and 5 of this Paragraph on him or her;
9) information on the shares acquired by the company itself by
indicating the grounds for the acquisition of shares.
(6) Entries in the register of shareholders shall be made in
conformity with the following provisions:
1) entries shall be made in chronological sequence;
2) deletion and exclusion of entries is not permitted;
3) each new division shall be added to the previous divisions
of the register of shareholders;
4) when a new division is created, complete current
composition of shareholders shall be reflected therein;
5) when submitting a division of the register of shareholders
to the Commercial Register Office, the status of the payment of
the fully paid shares need not be indicated.
(7) Entries in the first division of the register of
shareholders shall be made in accordance with the information
indicated in the memorandum of association.
(8) Further entries in the divisions of the register of
shareholders shall be made according to the information indicated
in the application for the acquisition of new shares or the
notice on the transfer of a share or any other changes in the
information to be entered in the register of shareholders, and
also in the cases specified in Section 192 of this Law.
(9) Each division shall be certified by the chairperson of the
executive board or an authorised member of the executive board
with his or her signature. The signature of the chairperson of
the executive board or a member of the executive board shall be
notarised. This provision need not be applied if changes in the
information referred to in Paragraph five, Clause 4 of this
Section are made in the register of shareholders.
(10) If a shareholder alienates a share, the entry in the
division of the register of shareholders shall also be certified
by the alienor and acquirer of the share with his or her
signature. Signatures of the alienor and acquirer of the share
shall be notarised.
(11) Shareholders, members of the executive board and
supervisory board, the auditor, as well as competent public
institutions are entitled to become acquainted with the register
of shareholders.
(12) A shareholder has the right to receive an extract from
the register of shareholders of the company certified by the
chairperson of the executive board or an authorised member of the
executive board on the shares in the company that are owned by
him or her or a copy of the last division of the register.
(13) If the company has granted a person the right to acquire
shares of the company, the executive board shall ensure the
accounting of such granted rights and the holders thereof, also
indicating the number of shares to be acquired and conditions for
the acquisition thereof. Shareholders, persons to whom the right
to acquire shares of the company has been granted, members of the
executive board and supervisory board, competent public
institutions and also other persons who have a lawful interest
are entitled to become acquainted with such information.
[2 May 2013; 17 December 2020; 16 June 2022]
Section 187.1 Making an
Entry in the Register of Shareholders and Submission of an
Application for Changes in the Register of Shareholders to the
Commercial Register Office
(1) A notice for making an entry in the register of
shareholders shall be submitted to the company by the person on
whom the entry is to be made.
(2) In the case a share is alienated, the acquirer and alienor
of the share shall submit a joint notice by which the transfer of
the share is certified or the original or a notarised copy of
such transaction document by which shares are transferred.
(3) A notice to the company shall be submitted by the acquirer
of the share if the shares:
1) are inherited;
2) are acquired by a court judgment that has entered into
effect;
3) have been alienated by a sworn bailiff while performing his
or her official duties;
4) have been alienated by the administrator of the insolvency
proceedings while performing his or her official duties;
5) are acquired by using a commercial pledge.
(31) The notice referred to in Paragraph three of
this Section shall be appended by a document on the basis of
which the shares are acquired or a notarised copy thereof.
(4) A shareholder shall submit a notice on changes in the
information to be entered in the register of shareholders on him
or her.
(5) The executive board shall make an entry in the register of
shareholders without the relevant notice if changes in the
information to be entered in the register of shareholders arise
only from the provisions for the increase or reduction in equity
capital or a valid reorganisation agreement, or the rights
provided for in the articles of association in respect of the
category of shares or when transferring an unchanged entry from
the previous division.
(6) The executive board has the obligation to make an entry in
the register of shareholders or to raise justified objections
against making of an entry not later than on the following day
after it has received a notice on changes in the information to
be entered in the register of shareholders. The executive board
shall refuse making of an entry in the register of shareholders
if the alienation or acquisition of shares has occurred in
contradiction with the law or founding documents, or the transfer
of shares is not clearly and unequivocally apparent from the
documents submitted to the company.
(7) The executive board shall, within three working days after
signing the new division, submit an application to the Commercial
Register Office for changes in the register of shareholders. The
lasts division of the register of shareholders of the company
shall be appended to the application. In the application, the
executive board shall certify that the provisions of this Law and
the articles of association of the company for the alienation of
a share have been complied with.
(8) If the executive board fails to make an entry in the
register of shareholders within the time limit and in accordance
with the procedures laid down in the law in the case referred to
in Paragraph three of this Section, or fails to submit a division
of the register of new shareholders to the Commercial Register
Office, the acquirer of the share may submit a notice to the
Commercial Register Office. The notice shall be appended by the
document referred to in Paragraph 3.1 of this Section
and it shall be certified in the notice that a notice has been
submitted to the executive board on the alienation of the share
by specifying the date on which the notice has been submitted to
the executive board.
(9) When making an entry in the register of shareholders, an
official of the Commercial Register Office shall draw up a
division of the register of new shareholders in two copies. A
division shall be signed only by the official of the Commercial
Register Office. One copy of the division shall be appended to
the registration file of the company, but the other copy shall be
sent to the company.
[2 May 2013; 15 June 2019; 17 December 2020]
Section 188. Alienation of a
Share
(1) A shareholder has the right to freely alienate a share
owned by him or her, unless the articles of association provide
otherwise.
(2) A transaction for the alienation, including transfer, of a
share shall be concluded in writing.
(3) A shareholder may gift, exchange, or otherwise alienate a
share (except sell) only with the consent expressed in the
decision of shareholders, unless the articles of association
provide otherwise.
(4) [16 June 2022]
[2 May 2013; 16 June 2022]
Section 188.1 Acquisition
of a Share in Good Faith
(1) The acquirer of a share shall be deemed as having good
faith if he or she has acquired the share from an alienor which
has been entered as a shareholder of the company in the division
of the register of shareholders existing in the Commercial
Register Office that is appended to the registration file of the
company.
(2) The acquirer of a share shall not be deemed as having good
faith if he or she is aware that the share does not belong to the
alienor, the alienor is not entitled to act with this share, the
alienor has been imposed a prohibition of alienation of the
share, or the acquirer is not aware of such facts due to gross
negligence thereof.
[2 May 2013]
Section 189. Right of First Refusal
of Shareholders
(1) If shares of a shareholder are sold, other shareholders
shall have the right of first refusal, unless the articles of
association provide otherwise.
(2) The seller of a share or the acquirer of a share shall
notify each shareholder and the executive board of the sale of
the shares, appending to the notice the purchase agreement
entered into or an accordingly certified copy thereof. If the
notice is sent by the acquirer of the share, it shall also be
sent concurrently to the seller of the share. The notice shall be
sent to the shareholder to the address for communication
indicated in the register of shareholders.
(3) The time limit for exercising the right of first refusal
shall be one month from the date when the notice on the sale of a
share has been sent to all shareholders, unless a shorter period
has been specified in the articles of association. The
shareholder may refuse from exercising the right of first refusal
in writing before the end of the specified time limit.
(4) A shareholder shall notify the person who has sent a
notice on the sale of a share and the executive board of
exercising the right of first refusal or refusal to exercise this
right.
(5) Within the period specified in Paragraph three of this
Section, the seller is prohibited from acting with the share,
amending the provisions of the purchase agreement or taking other
actions which could deteriorate the position of the shareholder
with the right of first refusal if he or she exercises the right
of first refusal.
(6) If the acquirer of shares is a shareholder of the company
and shareholders exercise their right of first refusal, shares
shall be divided between the acquirer of shares and shareholders
in proportion to the shares owned by them.
(7) If two or more shareholders exercise their right of first
refusal and the number of the shares to be sold is sufficient,
the shares shall be divided between these shareholders in
proportion to the shares owned by them.
(8) If two or more shareholders exercise their right of first
refusal, but the number of the shares to be sold is not
sufficient to divide them proportionally, a restricted auction
shall be organised among these shareholders in respect of the
remaining shares that cannot be proportionately divided. Other
procedures may be provided in the articles of association for the
division of the remaining shares.
(9) The purchase price acquired in a restricted auction shall
be transferred to the seller of the share.
[2 May 2013; 15 June 2017; 16 June 2022]
Section 189.1 Right of
First Refusal of a Shareholder if Shares are Sold by a Sworn
Bailiff while Performing Official Duties
(1) A sworn bailiff shall notify the executive board of the
announcement of the auction. The executive board shall, after
receipt of the abovementioned notice, immediately send it to the
shareholders.
(2) The sworn bailiff shall notify the executive board of the
right of the shareholders to exercise the right of first refusal.
The following shall be indicated in the notice:
1) the acquirer of the share determined in accordance with the
procedures laid down in the Civil Procedure Law;
2) the purchase price determined in accordance with the
procedures laid down in the Civil Procedure Law;
3) payment deadline which may not be shorter than 10 days
(excluding holidays and public holidays) from the day of sending
the notice;
4) the deposit account of the sworn bailiff.
(3) The executive board shall, after receipt of the notice
referred to in Paragraph two of this Section, immediately notify
the shareholders of the right to exercise the right of first
refusal by specifying in the notice the time limit for exercising
the right of first refusal which may not be shorter than five
days and longer than the payment deadline laid down in the notice
referred to in Paragraph two of this Section.
(4) The shareholder shall immediately notify the executive
board of exercising the right of first refusal or refusal to
exercise it. If the shareholder exercises the right of first
refusal, he or she shall pay the relevant purchase price into the
company account indicated by the executive board within time
limit for exercising the right of first refusal indicated by the
executive board.
(5) If the acquirer of the share indicated in the notice
referred to in Paragraph two of this Section is a shareholder of
the company and other shareholders exercise the right of first
refusal, or if two or more shareholders exercise the right of
first refusal, the shares shall be divided in accordance with the
procedures laid down in Section 189 of this Law.
(6) If shareholders exercise the right of first refusal, the
executive board shall transfer the amounts paid by the
shareholders in full amount of the purchase price to the account
indicated by the sworn bailiff and notify the sworn bailiff of
the acquirers of shares, the number of shares acquired by them
and the purchase price paid.
(7) If the purchase price is not paid within the time limit
for payment indicated in the notice referred to in Paragraph two
of this Section, the executive board shall immediately after
expiry of the abovementioned time limit make an entry in the
register of shareholders on the acquirer of the share indicated
in the notice referred to in Paragraph two of this Section.
(8) If a shareholder could not exercise the right of first
refusal due to the fault of the executive board, the shareholder
has the right of pre-emption. The right of pre-emption shall be
exercised in accordance with the procedures laid down in Section
189.3 of this Law.
[15 June 2017 / Section shall come into force on 1
January 2018. See Paragraph 58 of Transitional
Provisions]
Section 189.2 Right of
First Refusal of Shareholder if Shares are Sold by an
Administrator of Insolvency Proceedings or They are Sold by
Exercising the Right of Commercial Pledge
The provisions of Section 189.1 of this Law shall
be applicable also to the sale of shares by the administrator of
insolvency proceedings and the sale of shares by exercising the
right of commercial pledge.
[15 June 2017 / Section shall come into force on 1
January 2018. See Paragraph 58 of Transitional
Provisions]
Section 189.3 Right of
Pre-emption of a Shareholder
(1) If a shareholder could not exercise the right of first
refusal due to the fault of the seller or acquirer of shares, the
shareholder has the right of pre-emption.
(2) The provisions of the Civil Law for pre-emption shall be
applicable to the right of pre-emption of a shareholder insofar
as this Section does not stipulate otherwise.
(3) The right of pre-emption shall be exercised within one
month from the day when the shareholder with the right of
pre-emption became aware of the infringement of the right of
first refusal, but not later than within a year from the day when
a division of the register of shareholders was appended to the
registration file of the company in which the acquirer of shares
has been entered as the shareholder.
(4) The right of pre-emption may also be exercised in relation
to such shares to which the acquirer has subscribed for in
proportion to the shares to be redeemed or which have been
acquired by him or her until the day when the right of
pre-emption was exercised.
(5) If several shareholders with the right of pre-emption
apply for the exercise of the right of pre-emption, shares shall
be divided in accordance with the procedures laid down in Section
189 of this Law.
[2 May 2013; 15 June 2017 / Amendment regarding the
change of the number of this Section shall come into force on 1
January 2018. See Paragraph 58 of Transitional
Provisions]
Section 190. Pledging of Shares
Shares may be pledged on the basis of commercial pledge
regulations if the articles of association do not prohibit the
encumbering of shares.
Section 191. Inheritance of
Shares
(1) In the case of the death of a shareholder, the shares
owned by him or her shall be inherited by his or her heirs,
unless the articles of association specify that the shares
transfer to the company. If the articles of association provide
that the shares of the deceased shareholder transfer to the
company, then the company has the obligation to disburse a
compensation to the heirs or, in the case referred to in Section
416 of the Civil Law, a compensation to the State according to
the liquidation quota which the deceased shareholder would have
received at the moment of opening the succession.
(2) Shares for which there are no heirs shall be deemed as
property without heirs in accordance with Section 416 of the
Civil Law and shall escheat to the State. The State shall have no
voting rights, and, when determining the norm of representation,
these shares shall not be taken into account.
(3) The State shall offer the acquired shares for sale.
(4) Shareholders of the company shall have the right of first
refusal, unless otherwise specified in the articles of
association. The right of first refusal of the shareholders of
the company shall be exercised in accordance with the procedures
specified in this Law.
(5) If shares have not been sold in accordance with the
procedures specified in the law, they shall transfer to the
company.
[6 June 2013; 11 May 2023]
Section 192. Acquisition of Own
Shares
(1) The company may not acquire its own shares, except in
cases when it acquires these shares:
1) by way of inheritance;
2) in the case of the death of a shareholder if the articles
of association provide that the shares of the deceased
shareholder are transferred to the company;
3) due to a shareholder renouncing his or her shares in
writing;
4) due to a shareholder losing rights to an unpaid share;
5) if a shareholder is expelled from the company;
6) in the case when a shareholder who is a legal person is
terminated, if the shares of the legal person have not been
acquired by another person;
7) by reducing the equity capital, withdrawing shares from
market and deleting them;
8) by acquiring another company or a part thereof;
9) as a result of a non-exchange transaction;
10) by recovering claims thereof from third parties;
11) as a result of reorganisation, by disbursing a
compensation in the specified cases;
12) in the case when shares that escheat to the State as
property without heirs have not been sold in accordance with the
procedures specified in the law;
13) to allocate them to employees and members of the executive
board and supervisory board.
(2) If the company acquires its own shares, it shall not have
any of the rights of a shareholder. When determining the norm of
representation, these shares shall not be taken into account.
[14 February 2002; 22 July 2004; 6 June 2013; 17 December
2020]
Section 193. Alienation of Own
Shares
(1) The company shall alienate acquired own share within one
year from the day when it was acquired, except for the case
provided for in Section 192, Paragraph one, Clause 13 of this
Law. In such case, the provisions of Section 188, Paragraphs one,
two, and three, and also the provisions of Section 189, Paragraph
one of this Law shall be applicable accordingly.
(2) If the company fails to alienate its own shares within the
specified time limit, these shares shall be cancelled,
correspondingly reducing the equity capital in accordance with
the provisions of this Law for the reduction of equity
capital.
[22 April 2004; 2 May 2013; 17 December 2020]
Section 194. Rights of Shareholders
to Information
A shareholder has the right to receive information from the
executive board on the activities of the company and to become
acquainted with all documents of the company. These rights may be
restricted in each individual case by a decision of the meeting
of shareholders if there are a justified suspicions that the
shareholder may use the information acquired contrary to the
objective of the company, thus causing significant harm or losses
to the company or to one of the subjects included with the
company in a group of companies, or a third party.
[14 February 2002]
Section 195. Expulsion of a
Shareholder
(1) A court may expel a shareholder from the company on the
basis of a claim of the company, if he or she has, without a
justified reason, failed to fulfil his or her obligations or have
otherwise caused substantial harm to the interests of the
company, or has failed to discharge commitments, or has not
ceased the infliction of harm after receipt of a written warning
from the company.
(2) Action for the expulsion of a shareholder may be brought
by shareholders who represent not less than one half of the
equity capital of the company, unless a higher number of votes is
specified in the articles of association.
(3) In the case of expulsion of a shareholder, his or her
shares shall transfer to the company which has the obligation to
disburse the expelled shareholder his or her contribution which
shall be determined in accordance with the provisions of Section
156, Paragraph two of this Law.
Chapter 2
Changes in Equity Capital
Section 196. Decision on Changes in
Equity Capital
(1) Equity capital may be increased or reduced only on the
basis of a decision of the meeting of shareholders which provides
regulations for the increase or reduction of equity capital.
(2) The decision on changes in equity capital shall be
regarded as taken, if not less than two-thirds of votes of the
shareholders present vote for it, unless a higher number of votes
is specified in the articles of association.
(3) If the decision on changes in equity capital is taken,
relevant amendments shall be made at the same time to the
articles of association.
[22 April 2004]
Section 197. Increase of Equity
Capital
(1) The equity capital of the company may be increased:
1) by the existing shareholders or newly admitted shareholders
making contributions to the equity capital of the company and
receiving in return a relevant number of new shares;
2) after approval of the annual statement or the report on
economic activities for a shorter period than a year, by
increasing the nominal value of the existing shares or issuing
new shares, including fully or partially in the equity capital
the positive difference between own funds and the amount which is
formed by the equity capital and reserves which may not be
included for the increase of equity capital in accordance with
the law. New shares shall be divided between shareholders in
proportion to the shares owned by them, except when the
regulations for increasing the equity capital provide for the
transfer of the new shares to the company for the purpose of
allocating them to employees and members of the executive board
and supervisory board, and all of the shareholders with voting
rights have voted for the approval of the regulations for
increasing the equity capital. The report on economic activities
shall be drawn up in accordance with the requirements of the law
for the drawing up of the annual statement;
3) by increasing the nominal value of the existing shares or
issuing new shares, including the mandatory reserve fully or
partially in the equity capital. The new shares shall be divided
between shareholder in proportion to shares owned by them.
(2) [16 June 2022]
(3) If new shares are acquired at a price which exceeds the
nominal value of a share in accordance with the provisions of
Section 155, Paragraph two of this Law, the difference between
the acquisition price and the nominal value of the acquired share
shall not be included in the equity capital.
(4) Property contributions in the case of an increase of
equity capital are permitted only if they are provided for in the
regulations for increasing the equity capital.
(5) [14 February 2002]
(6) [15 June 2017]
(7) [15 June 2017]
(8) [15 June 2017]
(9) [15 June 2017]
[14 February 2002; 16 March 2006; 24 April 2008; 15 April
2010; 15 June 2017; 17 December 2020; 16 June 2022]
Section 198. Regulations for
Increasing the Equity Capital
(1) The decision to increase the equity capital shall approve
regulations for increasing the equity capital which shall
specify:
1) the means of increasing the equity capital;
2) the amount of the increased equity capital and the amount
by which it shall be increased;
3) the number of new shares;
4) the nominal value of a share;
5) the price of a share, if a share premium has been
specified;
6) the method of payment for shares;
7) the time limit during which third parties shall submit
applications for share acquisition, if the equity capital is
increased by accepting new shareholders;
8) the deadline for the payment for new shares, calculated so
that the new share would be fully paid not later than six months
from the date when the decision to increase the equity capital
has been taken;
9) the time limit from which the new shares shall give the
right to receive dividends;
10) other provisions which are not in contradiction to
law.
(2) If the equity capital of the company is less than that
specified in Section 185 of this Law, the company, the new shares
shall only be paid up in cash.
[15 April 2010]
Section 199. Shareholder's Right of
First Refusal
(1) Within 15 days from the date of taking the decision to
increase equity capital, a shareholder has the right of first
refusal to the acquisition of the new shares in proportion to the
number of shares already owned by him or her.
(2) If a shareholder has not exercised the right of first
refusal to acquire the new shares, then, within 15 days after
expiry of the time limit specified in Paragraph one of this
Section, they may be acquired by those shareholders who have
exercised the right of first refusal specified in Paragraph one
of this Section.
(3) If two or more other shareholders wish to acquire shares
to which a shareholder has not exercised the right of first
refusal, they shall be divided between these shareholders in
proportion to the number of shares owned by them. If the number
of shares to be sold is not sufficient to divide them
proportionally, the executive board shall organise a restricted
auction among these shareholders for the remaining shares that
cannot be proportionately divided.
(31) The purchase price acquired at a restricted
auction shall be transferred to the account of the company.
(4) If the shareholders have not exercised the rights provided
for in Paragraphs one, two or three of this Section, then third
parties may acquire the new shares.
[14 February 2002; 15 June 2017]
Section 200. Application to Acquire
Shares
(1) If a shareholder wishes to acquire the new shares, he or
she shall, within the term specified in Section 199, Paragraph
one or two of this Law, submit the company an application for the
acquisition of shares.
(2) A third party shall submit an application within the term
specified in the decision to increase equity capital.
(3) An application shall be binding on the person who has
submitted it.
(4) The following shall be indicated in an application:
1) the firm name of the company;
2) an offer to acquire shares in the company;
3) the number of shares which a person wishes to acquire;
4) the method by which the acquired shares will be paid up in
conformity with the regulations for increasing the equity
capital;
5) the item of the property contribution (if a property
contribution is made);
6) the term for making the contribution, not exceeding the
provisions of the regulations for increasing the equity
capital.
Section 201. Procedures for the
Payment of Equity Capital
When increasing the equity capital, the provisions of Sections
151-154 of this Law shall be applicable, unless otherwise
provided for in this Chapter.
Section 202. Application for the
Increase of Equity Capital to the Commercial Register Office
(1) After expiry of the payment term specified in the
regulations for increasing the equity capital or after all the
promulgated equity capital has been paid up according to the
regulations for increasing the equity capital (if the equity
capital has been paid up before expiry of the respective term),
the executive board shall submit an application for the increase
of equity capital to the Commercial Register Office.
(2) The following shall be attached to an application:
1) an extract of the minutes of the meeting of
shareholders;
2) the regulations for increasing the equity capital;
3) the text of amendments to the articles of association and
the full text of the new wording of the articles of
association;
4) applications of shareholders or third parties to acquire
shares;
41) the last division of the register of
shareholders;
5) if the equity capital is being increased by a monetary
contribution made previously, a statement of the payment service
provider or another document on the payment of share, except when
the equity capital is increased in accordance with the procedures
laid down in Section 197, Paragraph one, Clauses 2 and 3 of this
Law;
6) in the case of a property contribution - documents which
certify the value of the contribution. If the property
contribution has been transferred to the company - documents
attesting its transfer to the company;
7) a certification that no significant circumstances have
arisen which affect the value of the property contribution
referred to in Section 154, Paragraph 2.1 of this
Law;
8) [15 June 2017].
(3) Equity capital shall be deemed to be increased and the
rights resulting from the new shares shall arise starting from
the day when the new amount of the equity capital is entered in
the Commercial Register.
[22 April 2004; 24 April 2008; 18 December 2008; 15 April
2010; 2 May 2013; 15 June 2017; 16 June 2022]
Section 203. Certification of the
Increase of Equity Capital
[16 June 2022]
Section 204. Means of Reducing
Equity Capital
Equity capital shall be reduced by cancelling shares or
reducing the nominal value of shares.
Section 205. Regulations for the
Reduction of Equity Capital
(1) The regulations for the reduction of equity capital shall
indicate:
1) the reasons for reducing equity capital;
2) the means and procedures for the reduction of equity
capital;
3) the amount of the reduced equity capital and the amount by
which it shall be reduced;
4) the nominal value of a share.
(2) A notice on the reduction of the equity capital shall be
sent without delay to the Commercial Register Office. An extract
of the minutes of the meeting of shareholders and the regulations
for the reduction of equity capital shall pe attached to the
notice.
[18 December 2008]
Section 206. Amount of Reduction of
Equity Capital
Equity capital may be reduced to the amount specified in
Section 185 of this Law.
Section 207. Protection of
Creditors
(1) Within five days after taking the decision to reduce
equity capital, the executive board shall send a written notice
on the reduction of equity capital and the amount of the new
equity capital of the company to all known creditors of the
company whose right to claim against the company has arisen
before taking the decision to reduce equity capital.
(2) The Commercial Register Office shall publish on its
website a notice on the decision taken by the company to reduce
the equity capital. The notice shall include the time limit by
which creditors who wish to receive a security may apply, and the
time limit for applying claims of creditors which may not be less
than one month from the date when the notice has been
published.
(3) The company shall provide security for creditors who have
applied within the specified time limit (except for secured
creditors in the amount of secured claims).
[29 November 2012; 15 June 2017; 6 July 2021]
Section 208. Application to the
Commercial Register Office for the Reduction of Equity
Capital
(1) After expiry of the time limit for applying the claims of
creditors and claims are secured, the executive board shall
submit an application for the reduction of the equity capital to
the Commercial Register Office. The text of amendments to the
articles of association and the full text of the new wording of
the articles of association shall be attached to the
application.
(2) In the application, the executive board shall certify the
provision of security to creditors or the satisfaction of their
claims.
(3) The application shall be submitted to the Commercial
Register Office not later than six months after the day when the
decision to reduce equity capital has been taken.
(4) Equity capital shall be deemed to have been reduced from
the day when the new amount of equity capital has been entered in
the Commercial Register.
Chapter 3
Administration of the Company
Section 209. Administrative Bodies
of the Company
The administrative bodies of the company are the meeting of
shareholders and the executive board, as well as the supervisory
board (if such has been established).
Section 210. Competence of the
Meeting of Shareholders
(1) The following shall be within the competence only of the
meeting of shareholders:
1) making amendments to the articles of association;
2) increase or reduction of equity capital;
3) election or removal of members of the supervisory
board;
4) election or removal of members of the executive board;
5) approval of the annual statement and the distribution of
profits;
6) election and removal of the auditor and liquidator;
7) taking decisions on the bringing of actions against members
of the executive board or supervisory board, founders or
shareholders, and the appointment of a representative of the
company for conducting the matter in court;
8) [14 February 2002];
9) taking decisions on the termination, continuation,
suspension, renewal or reorganisation of the activities of the
company and also on the entry into, amendment or termination of a
group of companies agreement;
10) other issues which are transferred under the competence of
the shareholders in accordance with the law or the articles of
association.
(2) The meeting of shareholders also has the right to take
decisions on such issues as are within the competence of the
executive board or supervisory board. In such case, the
shareholders who voted for this decision shall be jointly liable
for any losses caused as a result of such decisions.
[14 February 2002; 22 April 2004; 29 November 2012; 11 May
2023 / The new wording of Clause 6 of Paragraph one shall
come into force on 1 July 2023. See Paragraph 82 of
Transitional Provisions]
Section 211. Voting Rights of
Shareholders
(1) Each share shall give a shareholder only one vote, unless
otherwise provided for in the articles of association.
(2) A shareholder shall not have the right to take part in
voting if a decision is to be taken:
1) on releasing him or her from obligations or liability;
2) on the bringing of an action against him or her;
3) on the conclusion of a transaction with him or her, or the
related person;
4) in the case referred to in Section 210, Paragraph two of
this Law, and there is a conflict of interests between the
shareholder and the company;
5) in the case referred to in Section 210, Paragraph two of
this Law, and the shareholder has been deprived of the right to
perform commercial activities of all types or a specific type. If
the shareholder has been deprived of the right to perform
commercial activities of specific type, he or she shall not have
the right to participate in voting on issues related to the
relevant type of commercial activities.
(3) When determining the norm of representation, the votes of
the shareholder referred to in Paragraph two of this Section
shall not be taken into account.
[14 February 2002; 14 June 2012; 29 November 2012; 16 June
2022]
Section 212. Meetings of
Shareholders
(1) A meeting of shareholders is valid if shareholders who
jointly represent not less than one half of the equity capital
with voting rights participate in it, if the articles of
association do not provide for a higher norm of
representation.
(2) If a meeting of shareholders convened according to the
procedures specified by law is not valid due to the lack of the
specified quorum, a reconvened meeting with the same agenda shall
be valid irrespective of the number of votes represented in
it.
(3) A shareholder may participate at a meeting of shareholders
in person or through a representative who has a written power of
attorney. Person who represents a shareholder on the basis of law
need not a power of attorney. Such persons shall present a
document which certifies the right of representation.
(4) A meeting of shareholders shall be chaired by the
chairperson of the executive board if the shareholders do not
elect another chairperson of the meeting.
[14 February 2002]
Section 213. Convening a Meeting of
Shareholders
(1) A regular meeting of shareholders shall be convened by the
executive board at least once a year in order to approve the
annual statement, decide on the distribution of profit, and elect
an auditor.
(2) If the executive board has not convened a regular meeting
of shareholders in the specified time limit, it may be convened
by:
1) the supervisory board (if such has been established);
2) the Commercial Register Office for fee.
(3) The executive board has the obligation to convene a
meeting of shareholders in the cases specified in the articles of
association and also when:
1) the conditions referred to in Section 219 of this Law have
set in;
2) the supervisory board has requested it;
3) it is requested by shareholders who represent not less than
one tenth of the equity capital of the company.
(4) If the executive board does not convene a meeting of
shareholders within one month after the day of receiving a
request, the supervisory board shall convene the meeting upon
request of any shareholder. If the supervisory board does not
convene a meeting of shareholders within one month after the day
of receiving a request, it shall be convened by the Commercial
Register Office for a fee. The fee and expenses for convening a
meeting shall be paid to the Commercial Register Office by the
requester. The company shall cover the amount paid to the
Commercial Register Office, if there was a good cause for
convening the meeting.
(41) A meeting of shareholders shall be convened in
the administrative territory in which the legal address of the
company has been registered, unless specified otherwise in the
articles of association.
(5) If the meeting of shareholders has not been held due to
the reason referred to in Section 212, Paragraph two of this Law,
a repeated meeting of shareholders shall be convened within one
month.
(6) Minutes shall be kept of the course of the meeting of
shareholders. The provisions of Section 285 of this Law shall be
applicable thereto.
[14 February 2002; 22 April 2004; 16 June 2005; 16 June
2011]
Section 214. Notice on Convening the
Meeting of Shareholders
(1) The executive board shall send a notice on convening the
meeting to all shareholders not later than two weeks before the
meeting. Notices shall be sent to the addresses for communication
indicated in the register of shareholders of the company. The
articles of association may provide for a different notice
procedures.
(2) The following shall be indicated in the notice:
1) the firm name and legal address of the company;
2) the place and time of the meeting;
3) the type of the meeting (regular or extraordinary meeting)
and whether it is a repeated meeting;
4) the body which is convening the meeting;
41) the procedures and time limits by which
shareholders may exercise the right to vote before the meeting of
shareholders or to participate or vote in the meeting of
shareholders through electronic means;
5) the provisions for the participation of the representatives
of shareholders in the meeting;
6) the agenda;
7) the time and place where and when the shareholders may
become acquainted with draft decisions on the issues included in
the agenda of the meeting and also with other issues to be
reviewed in the meeting.
(3) If the agenda of the meeting of shareholders includes the
issue of making amendments to the articles of association, a
draft decision to make amendments to the articles of association
shall indicate in particular:
1) the provisions of the articles of association to be
amended, supplemented or cancelled;
2) the new wording of the provisions of the articles of
association, if the articles of association are supplemented with
new provisions.
(4) [16 June 2022]
(5) The company shall, in accordance with the procedures laid
down in Section 273.1 of this Law, ensure that
shareholders have access to the documents to be examined at the
meeting of shareholders.
[22 April 2004; 20 March 2020; 16 June 2022]
Section 214.1 Remote
Participation and Voting in the Meeting of Shareholders
(1) A shareholder has the right to vote in writing (including
through electronic means) before the meeting of shareholders if
the following conditions are met:
1) the vote has been given in a way which allows the company
to ensure the identification of the shareholder;
2) the vote is received by the company at least one day before
the meeting of shareholders.
(2) A shareholder who has voted before the meeting of
shareholders may request the company to confirm the receipt of
the vote. The company shall, immediately after the receipt of the
vote of the shareholder, send the confirmation to the
shareholder.
(3) The executive board shall, upon its own initiative or upon
request of the shareholders who jointly represent at least 20 per
cent of the equity capital of the company and if the articles of
association do not provide for a lower norm of representation,
ensure a shareholder with the right to participate or vote in the
meeting of shareholders through electronic means. In such a case,
the executive board shall determine the requirements for the
identification of shareholders and the procedures by which the
shareholders can exercise this right.
(4) It may be stipulated in the articles of association that a
shareholder has the right to participate or vote in the meeting
of shareholders through electronic means. In such a case, the
articles of association shall stipulate or delegate the executive
board to determine the requirements for the identification of
shareholders and the procedures by which the shareholders can
exercise this right.
(5) The right of a shareholder to participate or vote in the
meeting of shareholders through electronic means shall not
restrict the right of the shareholder to participate and vote in
the meeting of shareholders in person.
(6) It may be provided in the articles of association that the
meetings of shareholders shall take place only electronically and
the shareholders shall participate and vote in the meeting of
shareholders through electronic means. The decision on the
abovementioned amendments to the articles of association is taken
if all of the shareholders with voting rights agree thereto.
(7) A shareholder who votes before the meeting of shareholders
or participates or votes in the meeting of shareholders through
electronic means shall be considered present at the meeting of
shareholders. In such a case the executive board shall prepare
the list of those shareholders who have voted before the meeting
of shareholders, and the shareholders shall be acquainted with
such list before the first vote. The information referred to in
Section 278, Paragraph three of this Law shall be indicated in
the list.
[20 March 2020]
Section 215. Taking a Decision
without Convening a Meeting of Shareholders
(1) Shareholders have the right to take decisions without
convening a meeting of shareholders, unless the law or the
articles of association specify that certain issues shall only be
decided at the meeting of shareholders.
(2) The executive board shall send a written draft decision
and documents that are of importance for taking the decision to
all shareholders, indicating the time limit by which a
shareholder may vote in writing "for" or "against" the taking of
the decision. Such time limit may not be less than two weeks from
the date when the draft decision was sent out. If a shareholder
has not given a written reply within the specified time limit, it
shall be deemed that he or she has voted against the taking of
the decision.
(3) The executive board shall draw up minutes of voting for
the results of the voting and shall immediately send the minutes
to all shareholders. The following shall be indicated in the
minutes of voting:
1) the firm name and legal address of the company;
2) the given name and surname of the person who drew up the
minutes;
3) the decisions taken and the results of the voting related
thereto;
4) pursuant to the request of a shareholder for the expression
of a different viewpoint - the substance of such viewpoint;
5) other information that is essential for voting.
(4) If a decision is taken without convening a meeting of
shareholders, the decision shall be considered taken if it has
received more than half of all of the shareholders' votes, unless
a higher number of votes is specified by law or the articles of
association.
Section 216. Taking of Decisions by
Shareholders
(1) The decision of the shareholders shall be taken if it has
received more than half of the votes represented at the meeting
of shareholders, unless a higher number of votes is specified by
law or the articles of association.
(2) The decision of the meeting of shareholders shall be
entered in the minutes or shall be prepared in the form of a
separate document. The minutes shall be signed by the chairperson
of the meeting, the recorder of the minutes and at least one
shareholder elected by the meeting - a person who shall certify
the accuracy of minutes. The decision shall be signed by the
chairperson of the meeting. If the decision is to be submitted to
the Commercial Register Office, the chairperson of the meeting
and at least one shareholder who has been elected as the person
to certify the accuracy of the decision shall sign the decision.
The original of the minutes or decision or a derivative the
accuracy of which shall be confirmed by the same persons who
signed the original shall be submitted to the Commercial Register
Office.
(3) A decision of the shareholders in respect of the company,
members of its supervisory board and executive board, the auditor
and shareholders shall be in effect from the moment of its
taking, unless the decision or the law provides another time
limit for the coming into effect of the decision.
[16 March 2006; 2 May 2013]
Section 217. Declaration of a
Decision of Shareholders as Void
(1) A court may, based on a claim of a shareholder, a member
of the executive board or supervisory board, declare a decision
of shareholders as void if such decision or procedures for taking
it are in contradiction with law or articles of association, or a
significant violations have been allowed in convening the meeting
or taking the decision, including an infringement of the right of
a shareholder to receive information in accordance with the
procedures laid down in Section 214 of this Law, to participate
or vote at the meeting. An action may be brought within three
months from the day when the person became aware or should have
become aware of the decision of the meeting, but not more than a
year from the day of occurrence of the meeting.
(2) If a decision has been taken in violation of the
procedures for taking decisions, the decision may not be
contested on such grounds if all the shareholders have voted for
this decision.
[15 June 2017]
Section 218. Taking Decisions on
Essential Matters
(1) The decision to make amendments to the articles of
association, terminate, continue, suspend or renew the activities
of the company, reorganise the company, and enter into, amend,
and terminate of a group of companies agreement shall be taken if
not less than two-thirds of the votes represented at the meeting
were given for such decision, if the articles of association do
not specify a higher number of votes.
(2) When applying amendments to the articles of association to
the Commercial Register Office, an extract from the minutes of
the meeting of shareholders with the decision to make amendments
to the articles of association and the full text of the articles
of association in the new wording signed by the executive board
and the persons who have signed the relevant minutes of the
meeting of shareholders shall be appended.
[22 April 2004; 29 November 2012; 2 May 2013 /
Amendment to Paragraph one shall come into force on 1 January
2014. See Paragraph 26 of Transitional Provisions]
Section 219. Convening of a Meeting
of Shareholders in Special Cases
If the losses of the company reach at least a half of the
equity capital of the company or the company has limited
solvency, the features of insolvency have been established or
they are likely to occur in the company, the executive board
shall notify the supervisory board (if such has been established)
thereof and convene a meeting of shareholders in which the
executive board shall provide explanations.
[22 April 2004; 24 April 2008; 15 June 2017]
Section 220. Supervisory Board
(1) The company shall establish a supervisory board if it is
provided in the articles of association.
(2) The provisions of Sections 291-300 of this Law shall be
applicable to the activities and competence of the supervisory
board, insofar as this Chapter does not provide otherwise.
(21) The supervisory board shall be elected for an
indefinite period, unless the articles of association provide
otherwise.
(3) Members of the supervisory board shall be elected by a
simple majority of votes of the present shareholders, unless the
articles of association require a higher number of votes for the
election of members of the supervisory board or the provisions of
Section 296, Paragraphs four, five, and six of this Law are
applicable.
(4) Section 296, Paragraph nine of this Law shall be
applicable if the articles of association of the company
stipulate that the supervisory board is elected in accordance
with the provisions of Section 296, Paragraphs four, five, and
six of this Law.
[22 April 2004; 18 December 2008; 15 April 2010]
Section 221. Executive Board
(1) The executive board is the executive body of the company
which manages and represents the company.
(2) The executive board may consist of one or more
members.
(3) A natural person with the capacity to act may be a member
of the executive board.
(4) A members of the supervisory board of the company, the
auditor of the company and members of the supervisory board of
the dominant undertaking in a group of companies may not be a
member of the executive board. Stricter restrictions on members
of the executive board may be provided in the articles of
association.
(5) The executive board has the obligation to provide
information to the meeting of shareholders on the transactions
concluded between the company and a shareholder, member of the
supervisory board or executive board.
(6) The executive board has the obligation to submit, at least
once every quarter, to the supervisory board a report on the
activities and financial situation of the company, and it shall,
without delay, notify the supervisory board of the deterioration
of the financial situation of the company, or other significant
circumstances related to the company's commercial activities.
(7) Members of the executive board shall elect a chairperson
of the executive board from among themselves who shall organise
the activities of the executive board. If the company has
established a supervisory board, the articles of association may
provide that the chairperson of the executive board is appointed
by the supervisory board.
(8) Members of the executive board have the right to
remuneration which is commensurate with their obligations and the
financial situation of the company. The amount of remuneration
shall be determined by a decision of the supervisory board, but
if the company has no supervisory board - by a decision of
shareholders.
(9) [14 February 2002]
(10) [14 February 2002]
(11) [22 April 2004]
[14 February 2002; 22 April 2004; 29 November 2012]
Section 222. Rights of the Executive
Board to Manage the Company
Members of the executive board shall manage the company only
jointly.
[14 February 2002]
Section 223. Representation Rights
of the Executive Board
(1) All members of the executive board have representation
rights. Members of the executive board shall represent the
company jointly unless the articles of association specify
otherwise.
(2) In the case of joint representation, the members of the
executive board may authorise from among themselves one or more
members of the executive board to conclude specific transactions
or specific types of transactions.
(3) The representation rights of the executive board in
respect of a third party may not be restricted. The rights of the
members of the executive board specified in the articles of
association to represent the company jointly or individually
shall not be deemed to be restrictions on the representation
rights of the executive board within the meaning of this
Section.
(4) In relation to the company, the executive board shall
observe the restrictions on representation which are specified in
the articles of association, decisions of the meeting of
shareholders and supervisory board, as well as the prohibition to
perform commercial activities of all types or specific type, or
hold specific positions.
[14 February 2002; 22 April 2004; 29 November 2012]
Section 224. Election and Removal of
Members of the Executive Board
(1) Members of the executive board shall be elected and
recalled by the meeting of shareholders with its decision. When
submitting an application to the Commercial Register Office for
the expiry of the powers of a member of the executive board,
changes in the representation rights or election of a new member
of the executive board, the application shall have appended an
extract of the minutes of the meeting of shareholders with the
relevant decision.
(11) The decision on the election of a member of
the executive board shall also be in effect if it has been taken
by a person who has not been entered in the register of
shareholders, however has acquired all shares of the company
provided that all shares:
1) are inherited;
2) are acquired by a court judgment that has entered into
effect;
3) have been alienated by a sworn bailiff while performing his
or her official duties;
4) have been alienated by the administrator of the insolvency
proceedings while performing his or her official duties;
5) are acquired by using a commercial pledge.
(12) The decision referred to in Paragraph
1.1 of this Section shall be appended by a document on
the basis of which all shares are acquired, or a notarised copy
thereof and the division of the register of new shareholders.
(2) In order to elect a person as a member of the executive
board, the consent of the relevant person shall be necessary. The
candidate for the member of the board shall indicate the
potential obstacles for holding the position in accordance with
Sections 4.1, 4.2, 4.3, 171 and
221 of this Law and the potential obstacles for the
implementation of the right of representation of the company in
accordance with Sections 4.1 and 4.2 of
this Law, or certify that he or she does not have such
obstacles.
(21) The Commercial Register Office shall be
submitted a written consent of the member of the executive board
in which he or she shall indicate the firm name and the
registration number of the company the member of the executive
board of which he or she agrees to become.
(3) A member of the executive board shall be elected for an
indefinite period, unless the articles of association provide
otherwise.
(4) A member of the executive board may be removed by a
decision of the shareholders. If the company has a supervisory
board, it may suspend any member of the executive board from his
or her position until the meeting of shareholders but not for
longer than two months.
(5) [14 February 2002]
(6) It may be provided for by the articles of association that
a member of the executive board may be removed only if there is
an important reason. Such reasons shall, in any case, be
considered to be gross violations of the powers, failure to
perform or to appropriately perform obligations, inability to
manage the company, or causing harm to the interests of the
company, as well as loss of confidence.
(7) [14 February 2002]
(8) A member of the executive board may leave the position of
the member of the executive board at any time by submitting a
notice thereon to the company.
[14 February 2002; 22 April 2004; 16 March 2006; 15 April
2010; 29 November 2012; 2 May 2013; 15 June 2017; 11 May 2023
/ The amendment regarding the new wording of the second
sentence of Paragraph two shall come into force on 1 August
2023. See Paragraph 83 of Transitional Provisions]
Division
XIII
JOINT-STOCK COMPANY
Chapter 1
Capital and Securities of a Joint-Stock Company
Section 225. Equity Capital of a
Joint-Stock Company
(1) The equity capital of a joint-stock company (hereinafter
in this Division - the company) may not be less than EUR 25
000.
(2) [16 June 2022]
[19 September 2013; 16 June 2022]
Section 226. Stock and the Legal
Relations Associated Therewith
(1) A stock is a security which certifies the stockholder's
participation in the equity capital of the company and gives him
or her the right, in conformity with the relevant category of the
stock, to take part in the administration of the company, receive
dividends and, in the case of the liquidation of the company, a
liquidation quota.
(2) A stock is indivisible.
(3) The legal relations arising in relation to publicly traded
stocks shall be governed by this Law, insofar as the Financial
Instrument Market Law does not provide otherwise.
[24 April 2008]
Section 227. Categories of
Stocks
(1) Different rights may be fixed in stocks to:
1) the receipt of dividends;
2) the receipt of liquidation quota;
3) voting rights at the meeting of stockholders.
(2) Stocks in which an equal amount of rights is fixed are
stocks of one category. If the company has several categories of
stocks, a different designation must be given to each category of
stocks.
Section 228. Registered Stock and
Dematerialised Stock
(1) A stock can be a registered stock or a dematerialised
stock. A registered stock is accounted in the register of
stockholders, and a dematerialised stock is recorded in the
central securities depository. All stocks of the company are
either registered stocks or dematerialised stocks.
(2) The rights arising from a registered stock belong to the
person who has been entered in the register of stockholders as a
stockholder. An individual, unchangeable sequence number is
assigned to each stock. The sequence number is assigned in the
order of the issue of stock.
(3) The rights arising from a dematerialised stock belong to
the person in the financial instrument account opened in his or
her name the stock is recorded in accordance with the Financial
Instrument Market Law.
(4) A meeting of stockholders may decide to convert
dematerialised stocks into recorded stocks and vice versa. When
taking the decision to converse the stocks, relevant amendments
shall be made to the articles of association.
[16 June 2022]
Section 229. Form of Stocks
[16 June 2022]
Section 230. Nominal Value of
Stocks
(1) The nominal value of stocks shall be laid down in the
articles of association of the company and expressed in
euros.
(2) The nominal value of stock may not be less than 10
cents.
(3) The nominal value of stock must be divided by the smallest
nominal value of the stocks of the company and 10 cents without a
remainder.
[19 September 2013 / The new wording of Section
shall come into force on 1 January 2014. See Paragraph 35
of Transitional Provisions]
Section 231. Preferred Stocks
(1) Preferred stock gives special rights to a stockholder in
relation to the receipt of dividends, liquidation quotas, and
also the dividends and liquidation quotas.
(2) The company may issue preferred stocks if such category of
stocks is provided in its articles of association.
(3) [22 April 2004]
[22 April 2004; 16 March 2006]
Section 232. Rights Arising from
Preferred Stocks
(1) The rights arising from preferred stocks shall be
determined in the articles of association.
(2) Preferred stocks do not give voting rights.
(3) If a stockholder who owns preferred stocks with special
rights in relation to the receipt of dividends is not disbursed
dividends for two reporting years in succession or is disbursed
only part of them, he or she shall acquire voting rights in the
next reporting year under general provisions in proportion to the
amount of the nominal value of the preferred stocks owned
thereby.
(4) The acquisition of voting rights shall not release the
company from the obligation to pay the arrears of dividends and
shall also not affect other rights which arise from preferred
stocks.
(5) A stockholder who own preferred stocks with special rights
in relation to the receipt of dividends shall lose their voting
rights on the last day of that reporting year during which he or
she has fully received all the previous arrears of dividends.
Section 233. Changing, Restricting
or Revoking Preferences
(1) A meeting of stockholders may, by making relevant
amendments to the articles of association, take the decision to
change, restrict or revoke those preferences which arise from
preferred stocks.
(2) The decision referred to in Paragraph one of this Section
shall be in effect if also the holders of preferred stocks of the
relevant category have voted for the taking of it with a number
of votes which is not less than three quarters of the total
number of this category of votes.
(3) The provisions of Paragraph two of this Section for the
consent of the holders of preferred stocks shall also apply to
the case when the decision to issue new preferred stocks which
have larger or equal preferences in comparison with the already
existing preferred stocks.
(4) The provisions of Paragraphs two and three of this Section
shall not apply to any of the following cases:
1) the articles of association provide for priority right to
holders of preferred stocks to the preferred stocks to be
issued;
2) when issuing the existing preferred stocks, the memorandum
of association, articles of association or the regulations for
increasing the equity capital explicitly specify that the
provisions of Paragraphs two and three of this Section shall not
apply.
[14 February 2002]
Section 234. Register of
Stockholders
(1) The company shall keep a register of stockholders for the
accounting of registered stocks, reflection of their transfer,
and ensuring the rights of stockholders.
(2) The register of stockholders is a file composed of
separate divisions. A division is a document which consists of a
set of entries made at the same time, reflecting the current
composition of stockholders.
(3) The division of the register of stockholders shall be
drawn up in two copies. One copy of the division shall be
appended to the register of stockholders, while the other shall
be submitted to the Commercial Register Office in accordance with
the procedures laid down in this Law.
(4) The register of stockholders shall be stored for 10 years
after deletion of the company from the Commercial Register.
(5) Entries in the register of stockholders shall be made in
conformity with the following provisions:
1) entries shall be made in chronological order;
2) deletion and exclusion of entries is not permitted;
3) each new division shall be appended to the previous
divisions of the register of stockholders;
4) when creating a new division, it shall reflect a complete
current composition of stockholders;
5) when submitting a division of the register of stockholders
to the Commercial Register Office, the status of the payment of
the fully paid stocks need be indicated.
(6) Each division shall be confirmed by the chairperson of the
executive board or an authorised member of the executive board
with his or her signature. The signature of the chairperson of
the executive board or a member of the executive board shall be
notarised. These provisions shall not be applied if changes are
made to the register of stockholders in respect of the
information referred to in Section 235, Paragraph one, Clauses 4
and 5 of this Law.
(7) If a stockholder alienates a stock, the entry in the
division of the register of stockholders shall also be confirmed
by the alienor and acquirer of the stock with their signature.
The signatures of the alienor and the acquirer of the stock shall
be notarised.
[16 June 2022]
Section 235. Information to be
Entered in the Register of Stockholders
(1) The firm name, registration number, legal address of the
company, and, where applicable, information about the fact that
the company is under the liquidation or insolvency proceedings,
and also the name of the document "Division of the Register of
Stockholders" shall be indicated in each division of the register
or stockholders and the following information shall be entered
therein:
1) the sequence number and date of the division;
2) the sequence number of the entry by using consecutive
numbering from the first division of the register of
stockholders;
3) the sequence number of stocks;
4) information on stockholders:
a) for a natural person - the given name, surname, personal
identity number (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document), and the address where he or she can be
reached;
b) for a legal person and partnership - the name, registration
number, and legal address;
5) the electronic mail address of the stockholder if the
stockholder has requested the company to use it for communication
with him or her;
6) the category, number, and nominal value of the stocks of
each stockholder, and the number of votes arising from
stocks;
7) the status of the payment of stocks;
8) the joint representative of stockholders who has been
appointed in accordance with the procedures laid down in Section
157 of this Law by indicating the information referred to in
Paragraph one, Clauses 4 and 5 of this Section on him or her;
9) information on the stocks acquired by the company itself,
indicating the grounds for the acquisition of stocks.
(2) Entries in the first division of the register of
stockholders shall be made according to the information indicated
in the memorandum of association.
(3) Further entries in divisions of the register of
stockholders shall be made according to the information indicated
in the application for the acquisition of new stocks or the
notice on the transfer of stock, or any other changes in the
information to be entered in the register of stockholders, and
also in the cases specified in Section 240 of this Law.
[16 June 2022 / See Paragraph 66 of Transitional
Provisions]
Section 235.1 Making of
an Entry in the Register of Stockholders and Submission of the
Application for Changes in the Register of Stockholders to the
Commercial Register Office
(1) A notice on making an entry in the register of
stockholders shall be submitted to the company by a person on
whom the entry is to be made.
(2) In the case of the alienation of stocks, the acquirer and
the alienor of the stocks shall submit a joint notice confirming
the transfer of stocks, the original transaction document, or a
notarised copy thereof under which the stocks are
transferred.
(3) The acquirer of stocks shall submit the notice to the
company if the stocks:
1) are acquired through inheritance;
2) are acquired by a court judgment that has entered into
effect;
3) have been alienated by a sworn bailiff while performing his
or her official duties;
4) have been alienated by the administrator of the insolvency
proceedings while performing his or her official duties;
5) are acquired by using a commercial pledge.
(4) The notice referred to in Paragraph three of this Section
shall be accompanied by a document on the basis of which stocks
have been acquired or a notarised copy thereof.
(5) A stockholder shall submit a notice on changes in the
information to be entered om him or her in the register of
stockholders.
(6) The executive board shall make an entry in the register of
stockholders without the respective notice if changes in the
information to be entered in the register of stockholders arise
solely from the provisions for the increase or reduction in the
equity capital or a valid reorganisation agreement, or when
transferring an unchanged entry from the previous division.
(7) The executive board has the obligation to make an entry in
the register of stockholders or raise substantiated objections to
making an entry not later than the next working day after receipt
of the notice on changes in the information to be entered in the
register of stockholders. The executive board shall refuse to
make an entry in the register of shareholders if stocks have been
alienated or acquired in contradiction with the law or the
documents of incorporation, or if the transfer of stocks is not
clearly and unambiguously evident from the documents submitted to
the company.
(8) The executive board shall, within three working days after
signing the new division, submit an application to the Commercial
Register Office for changes in the register of stockholders. The
application shall be accompanied by the last division of the
register of stockholders of the company. The executive board
shall certify in the application that the provisions of this Law
and the articles of association of the company for the alienation
of stocks have been complied with.
(9) If the executive board fails to make an entry in the
register of stockholders or to submit the new division of the
register of stockholders to the Commercial Register Office in the
case referred to in Paragraph three of this Section within the
term and in accordance with the procedures laid down in the law,
the acquirer of stocks may submit a notice to the Commercial
Register Office. The notice shall be accompanied by the document
referred to in Paragraph four of this Section and it shall be
certified in the notice that a notice has been submitted to the
executive board on the alienation of stocks, specifying the date
on which the notice has been submitted to the executive
board.
(10) When making an entry in the register of stockholders, an
official of the Commercial Register Office shall draw up a new
division of the register of stockholders in two copies. Only the
official of the Commercial Register Office shall sign the
division. One copy of the division shall be appended to the
registration file of the company, but the other copy shall be
sent to the company.
[16 June 2022]
Section 236. Right to Become
Acquainted with the Register of Stockholders
(1) Stockholders, members of the executive board and
supervisory board, the auditor, and competent public institutions
have the right to become acquainted with the register of
stockholders in the company.
(2) [16 June 2022]
(3) A stockholder has the right to receive an extract from the
register of stockholders of the company certified by the
chairperson of the executive board or a member of the executive
board authorised by the executive board on the stocks owned by
him or her in the company or a copy of the last division of the
register of stockholders.
[22 April 2004; 16 June 2022]
Section 236.1 Recording
of Dematerialised Stocks
(1) The company shall ensure recording of the stocks that are
admitted or are planned to be admitted for trading on a regulated
market or multilateral trading facility in the central securities
depository in accordance with the provisions of Regulation (EU)
No 909/2014 of the European Parliament and of the Council of 23
July 2014 on improving securities settlement in the European
Union and on central securities depositories and amending
Directives 98/26/EC and 2014/65/EU and Regulation (EU) No
236/2012 (hereinafter - Regulation No 909/2014).
(2) The company shall also ensure recording of other
dematerialised stocks in the central securities depository. The
stocks shall be recorded in the central securities depository
which has obtained an authorisation of the Financial and Capital
Market Commission for the operation of a central securities
depository or has acquired the right to provide services of a
central securities depository in the Republic of Latvia in
accordance with the procedures laid down in Article 23 of
Regulation No 909/2014.
(3) The meeting of stockholders shall decide on the central
securities depository in which stocks to record stocks. The
respective decision shall be deemed as taken if it not less than
three quarters of the votes of the present stockholders with
voting rights have been cast in favour thereof, unless the
articles of association require a higher number of votes.
(4) After the recording of stocks in the central securities
depository, the executive board shall submit an application to
the Commercial Register Office. The application shall indicate
the name, registration number, and legal address of the central
securities depository in which the stocks are recorded, and the
application shall be accompanied by a certification issued by the
central securities depository on the recording of stocks.
[16 June 2022; 11 May 2023 / Amendment to Paragraph
two regarding the deletion of the word "registration" shall come
into force on 1 July 2023. See Paragraphs 66 and 84 of
Transitional Provisions]
Section 236.2 Requesting
Information on the Holders of Dematerialised Stocks
(1) In order to ensure communication with stockholders and the
exercise of the rights of stockholders, the company and
stockholder have the right to receive information on the holders
of dematerialised stocks of the company.
(2) The company and competent authorities are entitled to
request information on the holders of the dematerialised stocks
of the company from the central securities depository where the
dematerialised stocks of the company are recorded. The company
whose stocks have been admitted for trading on a regulated market
shall request information on the holders of dematerialised stocks
in accordance with the procedures laid down in the Financial
Instrument Market Law.
(3) The company shall, upon request of a stockholder, provide
information at its disposal on the dematerialised stocks of the
company, including the following:
1) information on stockholders:
a) for a natural person - the given name, surname, and address
where he or she can be reached;
b) for a legal person and partnership - the name, registration
number, and legal address;
2) the electronic mail address of the stockholder to be used
for communication with the company or in issues related to the
company;
3) the category, number, and nominal value of the stocks of
each stockholder, and the number of votes arising from
stocks;
4) the joint representative of stockholders who has been
appointed in accordance with the procedures laid down in Section
157 of this Law by indicating the information referred to in
Clauses 1 and 2 of this Paragraph on him or her;
5) information on the stocks acquired by the company
itself.
(4) The company has the right to store the information
obtained in accordance with the procedures laid down in this
Section for not more than one year after it has become aware of
the loss of the status of a stockholder, while the stockholder
has the right to store this information for one year from the day
of receipt of the information.
[16 June 2022; 11 May 2023 / Amendments to Clause 4
of Paragraph three regarding the replacement of the words
"Paragraph two of this Section" with the words "of this
Paragraph" shall come into force on 1 July 2023. See
Paragraph 84 of Transitional Provisions]
Section 236.3
Stockholder's Obligation to Inform
(1) A stockholder who owns dematerialised stocks and has
acquired more than five per cent of the number of stocks of the
company shall notify the company in writing of the total number
of his or her stocks and the voting rights associated with this
number within two weeks from the day of acquiring the stocks
which exceed five per cent of the stocks of the company.
(2) In accordance with the provisions of Paragraph one of this
Section, a stockholder has the obligation to notify of each
further acquisition of the stocks of the company that increases
his or her holding in the company above each subsequent five per
cent of the number of the stocks of the company.
(3) The provisions of Paragraph one of this Section shall be
applicable respectively to the obligation of a stockholder to
notify of a reduction in holding each time it decreases by each
subsequent five per cent or becomes less than five percent of the
number of the stocks of the company.
(4) Until the moment of the submission of the notification
referred to in Paragraphs one and two of this Section, a
stockholder may not exercise the voting rights which arise from
the stocks the acquisition of which the stockholder has the
obligation to notify to the company. The respective votes of the
stockholder shall not be taken into account when determining the
norm of representation.
(5) The company shall, within two weeks after receipt of the
notice referred to in Paragraphs one, two, and three of this
Section, submit it to the Commercial Register Office.
(6) The provisions of this Section shall not be applicable to
companies whose stocks have been admitted for trading on a
regulated market.
[16 June 2022 / See Paragraph 68 of Transitional
Provisions]
Section 237. Payment of
Dematerialised Stocks
Dematerialised stocks may not be paid-up in instalments. They
shall be paid-up in full amount when subscribing to the
stocks.
[16 June 2022]
Section 238. Alienation of
Stocks
(1) A stockholder may freely alienate their stocks. Articles
of association may provide for restrictions on the alienation of
stocks.
(2) A transaction for the alienation of a registered stock,
including transfer thereof, shall be concluded in writing.
[16 June 2022]
Section 238.1 Acquisition
of a Registered Stock in Good Faith
(1) The acquirer of a registered stock shall be deemed as
having good faith if he or she has acquired the stock from an
alienor which has been entered as a stockholder of the company in
the division of the register of stockholders existing in the
Commercial Register Office and appended to the registration file
of the company.
(2) The acquirer of a registered stock shall not be deemed as
having good faith if he or she is aware that the stock does not
belong to the alienor, the alienor is not entitled to act with
this stock, the alienor has been imposed a prohibition on
alienation of the stock, or the acquirer is not aware of such
facts due to gross negligence thereof.
[16 June 2022; 11 May 2023 / Amendment to the title
and text of the Section regarding the replacement of the word
"word" with the word "registered" shall come into force on 1 July
2023. See Paragraph 84 of Transitional Provisions]
Section 238.2 Inheriting
Stocks
(1) Stocks for which there are no heirs shall be deemed as
property without heirs in accordance with Section 416 of the
Civil Law and shall escheat to the State. The State shall have no
voting rights and, when determining the norm of representation,
these stocks shall not be taken into account.
(2) The State shall offer the acquired stocks for sale.
(3) Stockholders of the company shall have the right of first
refusal, unless the articles of association provide otherwise.
The right of first refusal of the stockholders of the company
shall be exercised in accordance with the procedures specified in
this Law.
(4) If the stocks have not been sold in accordance with the
procedures specified in the law, they shall transfer to the
company.
[6 June 2013 / Number of the Section is amended by the Law
of 16 June 2002 and 11 May 2023. Amendment regarding the
deletion of the second and third sentence of Paragraph two, and
also the change of the number of the Section shall come into
force on 1 July 2023. See the Law of 16 June 2022 and
Paragraph 84 of Transitional Provisions]
Section 239. Prohibition on
Companies to Subscribe to Their Own Stocks
(1) The company may not subscribe to its own stocks.
(2) A dependent company of a group of companies may not
subscribe to the stocks of its dominant undertaking.
(3) If such person subscribes to the stock of the company who
acts in their own name but for the benefit of the company or its
dependent company, then it shall be deemed that such person has
subscribed to the stock on their own account. An arrangement
which is in contradiction with these provisions shall be
void.
Section 240. Prohibition to Acquire
Own Stocks
(1) The company may not acquire its own stocks, except in the
following cases:
1) if the company reduces its equity capital by withdrawing a
part of the stocks from circulation and cancelling them;
2) if the company acquires its own stocks to protect itself
from substantial direct losses;
3) if the company acquires its own stocks to allocate them to
employees and members of the executive board and supervisory
board;
4) if the company acquires its own stocks as a result of
reorganisation, by paying compensation in the cases specified by
law;
5) if the company acquires its own stocks when it acquires
another undertaking or its part;
6) if the company acquires its own stocks as a result of a
non-exchange transaction;
7) if the company acquires its own stocks by way of
inheritance;
8) if the company acquires its own stocks by recovering its
claims from third parties;
9) the stocks of a stockholder who has not paid-up such stocks
within the specified time limit shall transfer to the
company;
10) [22 April 2004];
11) the company shall acquire its own stocks if the stocks
which escheats to the State as property without heirs have not
been sold in accordance with the procedures specified in the
law;
111) the company shall acquire its own stocks in
the case of the termination of its stockholder who is a legal
person, unless another person has acquired the stocks of the
legal person;
12) the company acquires its own stocks in order to convert
debentures.
(11) The provisions of this Law for the prohibition
on the acquisition of own stocks shall be applied to the
acceptance of own stocks as a security.
(2) [16 June 2022]
(3) In the case provided for in Paragraph one, Clauses 2, 3,
and 12 of this Section, the company may acquire its stocks on the
basis of the decision of the meeting of stockholders where the
maximum number of the stocks to be acquired, and also the time
limit within which such stocks are to be acquired and which may
not exceed five years shall be indicated. If the stocks are
acquired for consideration, the decision shall also indicate the
minimum and maximum amount of consideration.
(31) In the case provided for in Paragraph one,
Clause 3 of this Section, the company may acquire its stocks by
not taking into account the provisions of Paragraph three of this
Section if the company alienates the stocks within a year from
the day of their acquisition.
(4) Stocks of the company owned by a person who has acquired
such stocks in his or her own name but for the benefit of such
company, as well as stocks of the company owned by a dependent
company of this company shall be deemed to be owned by that
company unless the law specifies otherwise.
(5) [16 June 2022]
(6) As a result of the acquisition of its own stocks, the
value of the own funds of the company may not fall below the
amount of the equity capital of the company.
(7) Own stock owned by the company shall not give the company
any of the rights which arise from such stock, and such rights
shall not be taken into account when determining the quorum of
the meeting of stockholders and in the distribution of
profit.
(8) The acquisition of own stocks shall be reflected by the
company in the annual statement, indicating the following
information on the stocks acquired in the relevant reporting
year:
1) reason for the acquisition;
2) the number of stocks acquired, the total amount of the
nominal values and the share of equity capital represented by the
stocks;
3) if the stocks are acquired for a fee - the type and amount
of payment.
(9) In addition to the information referred to in Paragraph
eight of this Section, the annual statement shall also indicate
the total number of own stocks owned by the company and the share
of equity capital represented by these stocks.
[14 February 2002; 22 April 2004; 24 April 2008; 6 June
2013; 15 June 2017; 16 June 2022]
Section 241. Prohibition on
Financing of the Acquisition of Own Stocks
(1) The company is prohibited from issuing loans or otherwise,
directly or indirectly, financing third parties in the
acquisition of the stocks of such company.
(2) [14 February 2002]
[14 February 2002]
Section 242. Alienation and
Cancellation of Own Stocks Owned by the Company
(1) If the company has acquired its own stocks in accordance
with the provisions of Section 240 of this Law, these stocks
shall be alienated within three years from the day of their
acquisition, except in the cases referred to in Section 240,
Paragraph one, Clause 1 and Paragraph four of this Law. This
provision shall not be applied to stocks the total amount of the
nominal values of which does not exceed one tenth of the equity
capital of the company.
(2) If the company has acquired its own stocks by violating
the provisions of Section 240 of this Law, the illegally acquired
stocks shall be alienated within one year from the day of their
acquisition.
(3) [15 June 2017]
(4) If the company does not alienate its own stocks within the
terms specified in Paragraphs one and two of this Section or if
it has acquired stocks in the case referred to in Section 240,
Paragraph one, Clause 1 of this Law, these stocks shall be
cancelled, reducing the equity capital respectively in accordance
with Sections 262-265 of this Law.
[22 April 2004; 15 June 2017; 17 December 2020; 16 June
2022]
Section 243. Condition under which
the Company Takes its Own Stocks as a Pledge
[16 June 2022]
Section 244. Convertible
Debentures
(1) The company may issue convertible debentures which a
debenture holder is entitled to exchange for the stocks of such
company within a specific time limit. Conversion of debentures
shall not be regarded as the making of a property
contribution.
(2) Convertible debentures may be issued both as registered
and bearer securities.
(3) The provisions of this Law for convertible debentures
shall also be applicable to other securities that can be
exchanged for stocks of the company.
[14 February 2002; 15 June 2017]
Section 245. Issuance of Convertible
Debentures
(1) [18 December 2008]
(2) The decision to issue convertible debentures shall also
approve the regulations for the issue of debentures which shall
indicate:
1) the number of debentures to be issued, the nominal value of
one debenture and the total amount of nominal value;
2) the price of debentures;
3) the term for the conversion of debentures;
4) the interest which the company undertakes to pay to the
debenture holder and provisions for their disbursement (if such
are provided);
5) the procedures and terms for the payment of debentures;
6) the procedures by which the debentures shall be exchanged
for stocks;
7) the rights of debenture holders;
8) other provisions which are not in contradiction to law.
(21) The meeting of stockholders shall,
concurrently with the decision to issue convertible debentures,
take the decision on the conditional increase of equity capital
in accordance with the procedures laid down in Section
261.1 of this Law.
(3) A debenture holder shall acquire a convertible debenture
after their full sales price has been paid.
(4) [15 June 2017]
[18 December 2008; 15 June 2017]
Section 246. Priority Right of
Convertible Debentures
(1) In the case of the issuance of convertible debentures, the
stockholders of the company have the priority right to acquire
such debentures.
(2) The priority rights of stockholders may be cancelled in
accordance with the procedures laid down in Section 253,
Paragraph two of this Law. The cancellation of the priority right
shall be provided for in issue regulations.
[14 February 2002; 15 June 2017]
Section 247. Register of Debenture
Holders
(1) The executive board shall keep a record of the convertible
debentures and their holders in a register of debenture holders.
The following shall be entered in the register of debenture
holders:
1) information on debenture holders:
a) for a natural person - the given name, surname, personal
identity number (if the person does not have a personal identity
number - the date of birth, the number and date of issue of a
personal identification document, the country and authority which
issued the document), and the address where he or she can be
reached;
b) for a legal person - name, registration number, and legal
address;
2) the number of debentures owned by each debenture holder,
their nominal value and ordinal number if such has been
allocated;
3) information on the conversion of the debentures.
(2) Debenture holders, members of the executive board and
supervisory board, and competent public entities have the right
to become acquainted with the register of debenture holders.
(3) A debenture holder has the right to receive an extract
from the register of debenture holders certified by the
chairperson of the executive board or a member of the executive
board authorised by the executive board on the debentures owned
by him or her.
[15 April 2010; 15 June 2017; 16 June 2022]
Section 248. Rights of Debenture
Holders
(1) Rights of the debenture holders who own convertible
debentures shall be determined by this Law, the articles of
association and the regulations for the issuance of
debentures.
(2) Debenture holders have the right to become acquainted with
the documents of the company according to the procedures and to
the extent specified by the meeting of stockholders. They shall
also have the right to participate at meetings of stockholders
without voting rights and, in the cases specified by law, in the
taking of decisions.
Section 248.1 Employee
Stock Options
(1) The company may issue employee stock options which give
the right to employees, members of the executive board and
supervisory board of this company or to that of the companies
within one group of companies to acquire its stocks.
(2) If stocks are acquired by using employee stock options
free of charge or for a fee that is lower than the nominal value
of the stock at the time of the use of the employee stock option,
the company shall issue stocks on the account of the
undistributed profit of the company or the payment for them shall
be made from a specially formed reserves.
(3) Employee stock options may not be alienated unless the
articles of association or regulations for the issuance of
employee stock options provide otherwise.
(4) The total amount of the nominal value of the stocks which
can be acquired by using the employee stock options may not
exceed 10 per cent of the equity capital of the company at the
moment when the decision to allocate the employee stock options
has been taken.
(5) The provisions of this Law for convertible debentures
shall be applicable to the issuance of employee stock options.
The following shall be additionally indicated in the provisions
for employee stock options:
1) the purpose for the issuance of employee stock options;
2) the range of those persons who may acquire employee stock
options;
3) the number, nominal value, and category of the stocks
intended for covering employee stock options and the rights
corroborated therein;
4) the procedures for the granting and transfer of employee
stock options including the type of and procedures for payment
(if such is provided);
5) the number of stocks to be obtained as a result of the use
of each employee stock option and the price of one stock (if such
is provided);
6) the procedures and terms for the use of employee stock
options;
7) formation of reserves if stocks may be acquired free of
charge or for a fee which is lower than the nominal value of the
stock at the time of exercising the right of purchase of employee
stock by using the employee stock options.
(6) The executive board shall ensure the keeping of the
register of employee stock options in accordance with the
procedures laid down Section 247 of this Law for accounting
employee stock options and holders thereof. The number of stocks
to be obtained by each employee, member of the executive board
and supervisory board shall be indicated in the register in
addition to the information laid down in Section 247 of this
Law.
[15 June 2017; 16 June 2022]
Chapter 2
Increase and Reduction of Equity Capital
Section 249. Right to Increase or
Reduce Equity Capital
(1) The equity capital may be increased or reduced only on the
basis of a decision of the meeting of stockholders by which the
regulations for an increase or reduction of the equity capital is
approved, and amendments to the articles of association of the
company are made, except for the case referred to in Paragraph
four of this Section.
(2) If the company has several categories of stocks, voting on
the decision to increase or reduce the equity capital at the
meeting of stockholders shall be conducted in accordance with the
provisions of Section 284, Paragraph three of this Law.
(3) [18 December 2008]
(4) An authorisation may be provided in the articles of
association for the executive board for a period of up to five
years to increase the equity capital in the amount specified in
the articles of association or in the meeting of stockholders,
not exceeding 30 per cent of the equity capital of the company at
the time of coming into effect of the authorisation.
(5) When increasing the equity capital in the case referred to
in Paragraph four of this Section, the amendments to the articles
of association of the company shall be made by the supervisory
board. The executive board shall prepare and sign the complete
text of the articles of association in the new wording.
(6) The executive board may use the authorisation referred to
in Paragraph four of this Section insofar as it is not otherwise
provided for in the articles of association or in the decisions
of the meeting of stockholders.
[24 April 2008; 18 December 2008; 15 June 2017]
Section 250. Increase of Equity
Capital
(1) The company shall increase its equity capital by issuing
new stocks in accordance with the decision to increase the equity
capital and by opening subscription to them.
(11) The company may increase the equity capital
after the approval of the annual statement or a report on
economic activities for a shorter period than a year by
proportionally increasing the nominal value of the existing
stocks or issuing new stocks, by fully or partially including in
the equity capital the positive difference between the own funds
and the sum formed by the equity capital and reserves which may
not be included for the increase of the equity capital in
accordance with the law. New stocks shall be distributed to
stockholders in proportion to the nominal value of the stocks
owned by them. The report on economic activities shall be drawn
up in accordance with the requirements of the law regarding
drawing up of the annual statement.
(2) [16 June 2022]
(3) If the newly issued stocks are paid for with a property
contribution, this contribution shall be assessed and an opinion
of a valuator thereon shall be provided in accordance with the
procedures laid down in Section 154 of this Law.
(4) [14 February 2002]
[14 February 2002; 24 April 2008; 15 April 2010; 15 June
2017; 16 June 2022]
Section 251. Priority Right of
Stockholders
(1) If the equity capital is increased, the current
stockholders have priority right to purchase the newly issued
stock in proportion to the total of the nominal value of the
stock already owned by them.
(2) [14 February 2002]
(3) If any of stockholders do not exercise their priority
right by the specified time limit, the relevant newly issued
stocks shall be offered for subscription according to the
procedures specified in the regulations for increasing the equity
capital to those current stockholders who have already exercised
their priority right.
[14 February 2002]
Section 252. Notice on Priority
Right of Stockholders
(1) The company shall send all stockholders a notice on the
priority right of stockholders to newly issued stocks in
accordance with the procedures laid down in Section 273,
Paragraphs two and three of this Law.
(2) The notice referred to in Paragraph one of this Section
shall indicate the following:
1) the firm name and legal address of the company;
2) the size of the equity capital and the planned amount of
increase in the equity capital;
3) the category, number and nominal value of the issued
stocks;
4) the sales price of stocks;
5) the term within which the stockholders must exercise their
priority rights and which shall not be less than 15 days from the
day when the notice was sent.
[16 June 2022]
Section 253. Restrictions on and
Revocation of Priority Right of Stockholders
(1) The priority right of stockholders may not be revoked or
restricted by the memorandum of association or the articles of
association. When increasing the equity capital in the cases
provided for in Section 261.1, Paragraph two of this
Law, stockholders shall not have priority rights.
(2) The priority rights of stockholders may be cancelled by a
decision of the meeting of stockholders taken in accordance with
the procedures laid down in Section 284, Paragraph two of this
Law. The meeting of stockholders which decides on the cancelling
of the priority rights shall provide a written justification for
the necessity to cancel the priority rights and the sales price
of the stock of new issue.
(3) Cancellation of the priority rights of stockholders shall
be provided for in the regulations for increasing the equity
capital.
(4) The decision of the meeting of stockholders on the
transfer of the organisation of subscription to stocks to third
parties (Paragraph one of Section 260) shall not be deemed to be
a restriction of the priority right. These persons shall ensure
the priority right of stockholders.
[15 June 2017]
Section 254. Increase of Equity
Capital for a Special Purpose
[15 June 2017]
Section 255. Employee Stocks
(1) Employee stocks are registered stocks which may not be
alienated and which the company allocates to its employees,
members of the executive board and supervisory board or to those
of the companies within one group of companies.
(2) Employee stocks may be allocated free of charge or for a
fee. If employee stocks are allocated free of charge, the stocks
shall be issued on the account of the undistributed profit of the
company.
(3) The company may issue employee stocks of different
categories. Employee stocks give the right to receive dividends
and, if the stocks are allocated for a fee, the right to the
liquidation quota. The employee stocks give the right to vote and
other rights if they are provided in the articles of
association.
(4) The total nominal value of outstanding employee stocks may
not exceed 10 per cent of the equity capital of the company.
(5) Employee stocks shall be kept by the company regardless of
their form.
(6) From the moment of expiry of the status of employee,
member of the executive board or supervisory board, the employee
stocks shall transfer to the company. In case of the death of a
stockholder, the employee stocks shall transfer to the
company.
(7) Regarding the transfer of the employee stocks to the
company in the case referred to in Paragraph six of this Section,
relevant entries shall be made in the register of stockholders
without the consent of the former stockholder.
(8) If employee stocks are granted for a fee, the company
shall pay a compensation to the former holder of employee stocks
or his or her heir in the case referred to in Paragraph six of
this Section the amount of which must be equal to the amount
which the stockholder would acquire by dividing the property of
the company in the case of liquidation if such would occur at the
time of the alienation of stocks.
(9) The provisions may be provided for in the articles of
association and regulations for increasing the equity capital
which differ from that referred to in Paragraph six of this
Section.
(10) Employee stocks shall be converted or cancelled in
accordance with the general procedures.
[15 June 2017; 16 June 2022]
Section 256. Increase of the Equity
Capital by Replacing the Debts of the Company with its Stocks
[14 February 2002]
Section 257. Regulations for
Increasing the Equity Capital
(1) The regulations for increasing the equity capital shall
indicate:
1) the purposes of or reasons for increasing equity
capital;
2) the existing equity capital, categories of stocks, their
number and nominal value;
3) the intended increase of the equity capital (the
promulgated equity capital);
4) the category or categories of the newly issued stock, as
well as the rights which arise from these categories of stock,
and the number of these stocks;
5) the nominal value, the sales price of the newly issued
stock and the minimum first payment to be made when subscribing
to the stock;
6) the type of payment for the newly issued stock (in cash or
by a property contribution);
7) the category, number and the total of the nominal value of
those newly issued stocks which shall be paid-up by property
contributions, indicating each item of property contribution and
its value;
8) the subscription and payment term of the newly issued
stocks with the intention that each of stock would be fully paid
for not later than within six months from the day when the
decision to increase the equity capital was taken;
9) the time limit within which the existing stockholders may
exercise their priority right to the newly issued stocks if they
have such rights;
10) the place and time where and when subscription to stocks
shall take place.
(2) When taking the decision to increase the equity capital in
the case referred to in Section 261.1 of this Law, the
information specified in Paragraph one, Clauses 8 and 9 of this
Section shall not be indicated in the regulations for increasing
the equity capital.
(3) When increasing the equity capital in the case referred to
in Section 249, Paragraph four of this Law, the newly issued
stock shall be paid up only in cash.
(4) [16 June 2022]
[14 February 2002; 24 April 2008; 15 June 2017; 16 June
2022]
Section 258. Notice to Stockholders
on Increasing Equity Capital
[16 June 2022]
Section 259. Nominal Value and Sales
Price of Newly Issued Stocks
(1) The nominal value of newly issued stock shall be
determined in the regulations for increasing the equity
capital.
(2) For each newly issued stock the sales price of such stock
which is determined by the executive board, but which may not be
less than the nominal value of the stock, shall be paid. The
sales price of stock is composed of the nominal value of the
stock, and the additional payment and the mark up of the issue.
The executive board may change the sales price of stock within
limits provided for in the regulations for increasing the equity
capital.
(3) [14 February 2002]
[14 February 2002; 22 April 2004]
Section 260. Payment of the Equity
Capital
(1) If the promulgated equity capital is not paid in full
amount within the term specified in the regulations for
increasing the equity capital, the issue of stocks shall be
considered as taken place in the amount of paid-up stocks, except
when the regulations for increasing the equity capital do not
allow for such an increase.
(2) If the issue of stocks is recognised as not taken place,
the paid cash shall be repaid to the subscribers of stocks.
(3) If the issue of stocks is recognised as taken place only
in the amount of paid-up stocks, the supervisory board shall make
the relevant amendments to the articles of association.
[16 June 2022]
Section 261. Application for the
Increase of Equity Capital to the Commercial Register Office
(1) After expiry of the payment term specified in the
regulations for increasing the equity capital or after all the
promulgated equity capital has been paid up according to the
regulations for increasing the equity capital (if the equity
capital has been paid up before expiry of the respective term),
the executive board shall submit the Commercial Register Office
an application for the increase of equity capital.
(2) The following shall be attached to an application:
1) an extract of the minutes of the meeting of stockholders
with the decision to increase the equity capital and the
regulations for increasing the equity capital;
11) an extract from the minutes of the executive
board meeting with the decision to increase the equity capital in
the case referred to in Section 249, Paragraph four of this Law,
and an extract from the minutes of the supervisory board meeting
with the decision to allow the executive board to increase the
equity capital;
2) the text of amendments to the articles of association and
the full text of the new wording of the articles of
association;
21) the last division of the register of
stockholders or a certification issued by the central securities
depository on the registration of dematerialised stocks;
22) a statement or another document of the payment
service provider on the payment of the share (if the payment is
made with a monetary contribution), except when the equity
capital is increased in accordance with the procedures laid down
in Section 250, Paragraph 1.1 of this Law;
3) [16 June 2022];
4) documents certifying the valuation of each item of a
property contribution and its transfer to the company (if the
payment was made by property contribution);
5) a certification that no significant circumstances have
arisen which affect the value of the property contribution
referred to in Section 154, Paragraph 2.1 of this
Law.
(3) Equity capital shall be deemed to have been increased and
the right resulting from stocks shall arise starting from the
moment when an entry has been made in the Commercial
Register.
(4) [22 April 2004]
[22 April 2004; 24 April 2008; 15 June 2017; 16 June
2022]
Section 261.1 Increase of
Equity Capital with a Condition
(1) The meeting of stockholders may take the decision to
increase equity capital with a condition (conditional equity
capital) that newly issued stock is used for a special purpose
which is indicated in the regulations for increasing the equity
capital. In such cases, the increase in equity capital may not
exceed the amount necessary for the special purpose.
(2) According to the procedures specified in Paragraph one of
this Section, equity capital may be increased only for the
following purposes:
1) for the exchange of newly issued stock for convertible
debentures;
2) for the exchange of newly issued stock for the stock of the
company to be merged in the case of a re-organisation;
3) as compensation to minority stockholders which is conducted
by the dominant undertaking of a group of companies as an
exchange of stock;
4) allocation of newly issued stock to employees and members
of the executive board and supervisory board.
(3) When increasing the equity capital in accordance with the
procedures laid down in this Section, the range of those persons
who have the right to acquire newly issued stock shall be
additionally indicated in the regulations for increasing the
equity capital.
(4) The executive board shall submit to the meeting of
stockholders which examines the matter of increasing equity
capital with a condition a justification for the necessity of
such an increase.
(5) [16 June 2022]
(6) If the equity capital is increased in the case laid down
in Paragraph two, Clause 4 of this Section, the newly issued
stocks shall be paid up only in cash.
(7) After the meeting of stockholders has taken the decision
to increase equity capital with a condition, the executive board
shall submit an application to the Commercial Register Office in
which the amount of the conditional equity capital is indicated.
The application shall be appended an extract from the minutes of
the meeting of stockholders with the relevant decision and
regulations for increasing the equity capital.
(8) After the conditions provided for in the regulations for
increasing the equity capital have set in, a person who is
entitled to acquire the stock of the company in accordance with
the regulations for increasing the equity capital shall submit an
application to the company. A person who submits the application
shall completely pay up the stocks if the payment of stocks is
necessary.
(9) The executive board shall take the decision to issue
stocks (to increase equity capital) within 10 days after the
application of the person referred to in Paragraph eight of this
Section has been received. In such case, the provisions of
Section 309 of this Law shall not be applied. The executive board
shall firstly use own stocks belonging to the company for the
achievement of the purposes laid down in Paragraph two of this
Section, unless it is otherwise specified in the regulations for
increasing the equity capital.
(10) The supervisory board shall, within a month after the
executive board has taken the decision referred to in Paragraph
nine of this Section to issue stocks, make amendments to the
articles of association by adjusting the amount of equity
capital. The executive board shall prepare and sign the complete
text of the articles of association in the new wording.
(11) After the issue of stocks referred to in Paragraph nine
of this Section, the executive board shall submit an application
for the increase of equity capital to the Commercial Register
Office. In the application, it shall include a reference to the
decision of the meeting of stockholders referred to in Paragraph
one of this Section and indicate the remaining amount of
conditional equity capital that is necessary for the performance
of the special purpose. The following shall be attached to the
application:
1) the decision of the executive board to issue the
stocks;
2) the decision of the supervisory board to make amendments to
the articles of association;
3) the text of amendments to the articles of association and
the full text of the new wording of the articles of
association;
4) the last division of the register of stockholders or a
certification issued by the central securities depository on the
registration of dematerialised stocks.
(12) Equity capital shall be considered to be increased by the
amount of the issue of stocks laid down in the decision of the
executive board from the moment when the entry is made in the
Commercial Register.
[15 June 2017; 16 June 2022]
Section 262. Reduction of Equity
Capital
(1) Equity capital shall be reduced:
1) by the company itself acquiring and cancelling its own
stocks;
2) by cancelling stocks which have been submitted by
stockholders;
3) by reducing the nominal value of stocks.
(2) The equity capital may not be reduced below the amount
specified in Section 225, Paragraph one of this Law.
(3) If the equity capital is to be reduced, the equity capital
shall first of all be reduced on the account of the own stock
owned by the company.
(4) If the equity capital is to be reduced, the nominal value
of the cancelled stocks may be disbursed to the stockholders only
after the creditor protection measures specified in Section 264
of this Law have been fully implemented.
[14 February 2002]
Section 263. Regulations for the
Reduction of Equity Capital
(1) The regulations for the reduction of equity capital shall
indicate:
1) the reasons for reducing equity capital;
2) the amount by which equity capital will be reduced;
3) the means of reducing the equity capital;
4) the number of stock to be cancelled or the amount by which
the nominal value is to be reduced;
5) the time limits for the return or exchange of stocks;
6) if a part of the equity capital is intended to be disbursed
to stockholders - the provisions for disbursement.
(2) A notice on the reduction of the equity capital shall be
sent without delay to the Commercial Register Office. An extract
of the minutes of the meeting of stockholders with the decision
to reduce the equity capital and the regulations for the
reduction of equity capital shall be appended to the notice.
Section 264. Protection of Creditors
in the Case of Reduction of Equity Capital
(1) Within five days from the date when the decision to reduce
the equity capital has been taken, the executive board shall send
a written notice on the reduction of equity capital and the new
amount of equity capital to all known creditors of the company
whose right to claim against the company has arisen before the
decision to reduce the equity capital was taken.
(2) The Commercial Register Office shall publish on its
website a notice on the decision taken by the company to reduce
the equity capital. The notice shall indicate the time limit
within which creditors who wish to receive security may apply.
The notice shall indicate a time limit for the submission of the
claims of creditors which may not be shorter than one month from
the day when the notice has been published.
(3) The company shall provide security for creditors who have
applied within the specified time limit (except for secured
creditors in the amount of secured claims).
[29 November 2012; 15 June 2017; 6 July 2021]
Section 265. Application to the
Commercial Register Office for the Reduction of Equity
Capital
(1) After expiry of the term for the submission of the claims
of creditors, and the claims have been secured, the executive
board shall submit an application for the reduction of equity
capital to the Commercial Register Office. The text of amendments
to the articles of association and the full text of the new
wording of the articles of association shall be attached to the
application.
(2) In the application, the executive board shall certify the
provision of security to creditors or the satisfaction of their
claims.
(3) The application shall be submitted to the Commercial
Register Office not later than six months after the day when the
decision to reduce equity capital has been taken.
(4) Equity capital shall be deemed to have been reduced from
the day when the new amount of equity capital has been entered in
the Commercial Register.
Chapter 3
Organisational Structure of the Company
Section 266. Administrative Bodies
of the Company
The company shall be administered by meetings of stockholders,
the supervisory board and the executive board.
Section 267. Meeting of
Stockholders
(1) Stockholders exercise their rights to take part in the
administration of the company at a meeting of stockholders.
(2) Regular and extraordinary meetings of stockholders shall
be convened.
(3) A meeting of stockholders shall be convened in the
administrative territory where the legal address of the company
has been registered, unless specified otherwise in the articles
of association.
[16 June 2011]
Section 268. Competence of a Meeting
of Stockholders
(1) Only the meeting of stockholders has a right to take
decisions on:
1) the annual statement of the company;
2) the use of the profit from the previous operational
year;
3) the election and removal of the members of the supervisory
board, auditors, and liquidators;
4) the bringing of actions against members of the executive
board, the supervisory board, and the auditor or withdrawing
actions against them, as well as on the appointment of a
representative of the company to maintain actions against members
of the supervisory board;
5) [14 February 2002];
6) amending the articles of association of the company;
7) increasing or reducing equity capital;
8) the issuance and conversion of the securities of the
company, and also the central securities depository in which to
record the dematerialised stocks of the company;
9) specifying the remuneration for members of the supervisory
board and the auditor;
10) the termination of the activities of the company or their
continuation, suspension or renewal or regarding the
reorganisation of the company;
11) the general principles, types and criteria for
determination of remuneration intended for the members of the
executive board and supervisory board;
12) granting of company stocks to employees and members of the
executive board and supervisory board.
(2) A meeting of stockholders shall take decisions on other
issues only if it is provided for by law.
[14 February 2002; 24 April 2008; 29 November 2012; 15 June
2017; 16 June 2022; 11 May 2023 / The new wording of
Clause 3 of Paragraph one shall come into force on 1 July
2023. See Paragraph 82 of Transitional Provisions]
Section 269. Regular Meeting of
Stockholders
(1) A regular meeting of stockholders shall decide on the
annual statement, the reports of the executive board and
supervisory board, the use of the profit from the previous
reporting year, and also other issues included in its agenda.
(2) A regular meeting of stockholders shall be convened by the
executive board each year. When convening a regular meeting, the
time limit specified in law for the approval of annual statements
shall be complied with.
(3) If the executive board has not convened a regular meeting
of stockholders within the specified time limit, it may be
convened by:
1) the supervisory board;
2) the Commercial Register Office;
3) [16 June 2005]
(4) The Commercial Register Office shall convene a regular
meeting of stockholders for fee upon request of one or more
stockholders, if the meeting has not taken place within the time
limit specified in law.
[16 June 2005; 16 June 2011]
Section 270. Extraordinary Meeting
of Stockholders
(1) An extraordinary meeting of stockholders may be convened
by the executive board pursuant to its own initiative and shall
be convened if it is requested by the supervisory board, the
auditor or stockholders who jointly represent not less than one
twentieth of the equity capital of the company, if a lower
representation norm is not specified in the articles of
association.
(2) In their request to convene an extraordinary meeting of
stockholders, the initiators shall indicate the reasons for
convening the meeting and the agenda. The request to convene a
meeting shall be submitted to the executive board and supervisory
board, and the auditors shall be notified thereof.
(21) An extraordinary meeting of stockholders shall
be convened not later than within three months after the day when
the request was received.
(3) The executive board shall announce the convening of an
extraordinary meeting of stockholders not later than within two
weeks from the day when it receives a request.
(4) If the executive board does not convene an extraordinary
meeting of stockholders within the time limit referred to in
Paragraph three of this Section, it shall be convened by the
supervisory board.
(5) The Commercial Register Office shall convene an
extraordinary meeting of stockholders for a fee, if the meeting
has not taken place within the term specified in Paragraph
2.1 of this Section and it is requested by an auditor
or stockholders which in total represent not less than one
twentieth of the equity capital of the company, unless the
articles of association provide for a lower norm of
representation.
[14 February 2002; 16 June 2005; 16 June 2011]
Section 271. Convening of the
Meeting of Stockholders in Special Cases
If the losses of the company reach at least half of the equity
capital of the company or the company has limited solvency, the
features of insolvency proceedings have been established or they
are likely to occur in the company, the executive board shall
notify the supervisory board thereof and convene a meeting of
stockholders where it shall provide explanations. The meeting of
stockholders shall decide on the submission of the application
for legal protection proceedings or application for insolvency
proceedings, termination of activities, liquidation and
reorganisation of the company, changes to its equity capital or
shall take another decision to improve the economic circumstances
of the company.
[24 April 2008; 15 June 2017]
Section 272. Costs of Convening
Meetings of Stockholders
(1) The company shall cover the costs related to the convening
of the meetings of stockholders.
(2) The fee and expenses for convening the meeting of
stockholders shall be paid by the requester to the Commercial
Register Office. The company shall cover the amount paid to the
Commercial Register Office, if there was a substantiated reason
for convening the meeting of stockholders.
[16 June 2005]
Section 273. Procedures for
Convening a Meeting of Stockholders
(1) A notice on the convening of a meeting of stockholders
shall be sent not later than 21 days before the planned meeting
of stockholders.
(2) The executive board shall send the notice on the convening
of a meeting of stockholders to all stockholders to the addresses
for communication indicated in the register of stockholders. The
articles of association may provide for different notification
procedures.
(3) If the company has dematerialised stocks, the executive
board shall send the notice on the convening of a meeting of
stockholders to the central securities depository in which the
stocks of the company are recorded. The central securities
depository shall immediately transfer the notice to the operator
of the financial instrument account who shall immediately forward
it to the stockholder. The articles of association may provide
for different notification procedures, unless the law stipulates
otherwise.
(4) The following shall be indicated in the notice:
1) the firm name and legal address of the company;
2) the place and time of the meeting;
3) the type of the meeting (regular or extraordinary meeting)
and whether it is a repeated meeting;
4) the body which is convening the meeting;
5) the procedures according to which and the terms during
which the stockholders may exercise the right to vote before the
meeting of stockholders or to participate or vote in the meeting
of stockholders through electronic means of communication;
6) the procedures according to which and the terms during
which the stockholders may exercise the following rights:
a) include additional issues on the agenda and submit draft
decisions;
b) ask questions about the issues included on the agenda of
the meeting;
7) the provisions for the participation of the representatives
of stockholders in the meeting;
8) the agenda;
9) the place and time where and when stockholders may become
acquainted with the draft decisions on the issues included on the
agenda of the meeting, and also other items to be examined at the
meeting;
10) the date of the entry (if the company has dematerialised
stocks) and the explanation that only persons who are
stockholders on the date of entry are entitled to participate and
vote in the meeting of stockholders.
(5) If stocks of the company are admitted for trading on a
regulated market or multilateral trading system, the following
shall be additionally indicated in the notice:
1) the website of the company where the information and
documents specified in Section 273.2 of this Law will
be available to stockholders;
2) the procedures for voting on the basis of a power of
attorney, including information on the forms to be used for
voting and the manner in which a stockholder can inform the
company of the appointment of an authorised person through
electronic means of communication.
(6) If information on the procedures by which stockholders can
exercise the right referred to in Paragraph four, Clause 6 of
this Section is available on the website of the company, only
term for exercising such right can be indicated in the
notice.
[16 June 2022]
Section 273.1 Access to
the Documents to be Examined in the Meeting of Stockholders
(1) The company shall ensure that stockholders have continuous
and free electronic access to the documents to be examined in the
meeting of stockholders. The company shall ensure electronic
access to the documents (including the possibility to save and
print the documents) starting from the day when the notice on the
convening of the meeting of stockholders is sent and for not less
than one year after the meeting of stockholders.
(2) The company shall immediately, upon receipt of draft
decisions or explanations from the stockholders on the issues on
which no decision is intended to be taken, ensure that the
stockholders can access them in accordance with the provisions of
this Section. If stocks of the company are admitted for trading
on a regulated market or multilateral trading system, it shall
post the respective documents on its website immediately after
receipt thereof.
(3) If the company cannot ensure that stockholders have
continuous electronic access to the documents before the meeting
of stockholders due to technical or other reasons or if a
stockholder cannot access the electronically available documents
due to justified reasons, the company shall, upon request of the
stockholder, send the documents to the stockholder free of charge
or ensure other free access to the documents at least 14 days
before the meeting.
(4) If the company cannot ensure that stockholders have
continuous electronic access to documents within the period
specified in Paragraph one of this Section after the meeting of
stockholders due to technical or other reasons, the stockholders
have the right to access the documents at the legal address of
the company.
[16 June 2022]
Section 273.2 Publication
of Information on the Website of the Company
(1) If the stocks of the company are admitted for trading on a
regulated market or multilateral trading system, the company
shall, at least in the period from the promulgation of the
meeting of stockholders and for not less than one year after the
meeting of stockholders, provide the stockholders the following
information and documents on its website:
1) the notice on the convening of the meeting of
stockholders;
2) information on the total number of stocks and the total
number of stockholders with voting rights, and if the company has
stocks of several categories - the number of stocks of each
category and the number of votes of stockholders with voting
rights on the day when the notice on the convening of the meeting
of stockholders is promulgated;
3) the documents referred to in Section 273, Paragraph four,
Clause 9 of this Law;
4) explanations provided by the bodies convening the meeting
of stockholders regarding such issues of the agenda of the
meeting of stockholders on which no decision is intended to be
taken;
5) forms to be used to vote on the basis of a power of
attorney or before the meeting.
(2) If the company cannot ensure that stockholders have access
to the forms referred to in Paragraph one, Clause 5 of this
Section on its website due to technical reasons, the company
shall indicate on its website the manner in which a stockholder
can receive the form in paper form. In this case, the company
shall ensure that forms are available free of charge to any
stockholder requesting them.
[16 June 2022]
Section 274. Agenda of the Meeting
of Stockholders
(1) The issues to be included on the agenda of the meeting of
stockholders shall be determined by the persons or the body which
initiated the meeting.
(2) Stockholders who represent at least one twentieth of the
equity capital of the company have the right to, not later than
15 days before the meeting of stockholders, request that the body
convening the meeting of stockholders includes additional issues
on the agenda of the meeting. A stockholder who requests the
inclusion of additional issues on the agenda of the meeting shall
submit to the body convening the meeting of stockholders draft
decisions or explanations regarding the issues won which no
decision is intended to be taken.
(3) The executive board or another body which is convening the
meeting of stockholders shall include additional issues on the
agenda of the meeting of stockholders and send them not later
than fourteen days before the meeting, just as the notices on the
convening of the meeting.
(4) Stockholders who represent at least one twentieth of the
equity capital of the company have the right to, not later than
seven days before the meeting of stockholders, submit draft
decisions on the issues included on the agenda of the
meeting.
(5) If the meeting of stockholders intends to amend the
articles of association of the company, the draft decision on the
amendments to the articles of association of the company shall
specify which paragraphs of the articles of association are
proposed to be declared void or amended, and the new wording of
these paragraphs.
[14 February 2002; 16 June 2022]
Section 275. Capacity to Act of the
Meeting of Stockholders
(1) The meeting of stockholders is entitled to take decisions
irrespective of the equity capital represented therein if the
articles of association do not specify a norm of
representation.
(2) If the meeting of stockholders convened in accordance with
the procedures laid down in the law is not valid because it does
not have a specific quorum, a repeated meeting with the same
agenda shall be convened within one month, and it shall be valid
regardless of the number of votes represented therein. A notice
on the repeated meeting shall be sent not later than 14 days
before the planned meeting.
[14 February 2002; 16 June 2022]
Section 276. Issues to be Examined
at the Meeting of Stockholders
(1) The meeting of stockholders may take decisions only on
those issues of the agenda that are indicated in the notice on
the convening of the meeting, except for the cases referred to in
Paragraphs two and three of this Section.
(2) If all the equity capital with voting rights is
represented at a meeting of stockholders, the meeting shall be
deemed to have the capacity to act irrespective of the time and
manner of its convening and the place where it takes place. Such
meeting may also discuss issues not included on the agenda and to
take decisions on them, if all the stockholders with voting
rights unanimously agree thereto.
(3) The meeting of stockholders may take decisions on the
following issues (even if they are not included on the
agenda):
1) removal of the supervisory board, auditor, or liquidator,
provided that, in the case of removal of the liquidator, a new
liquidator is elected at the same meeting;
2) bringing an action against members of the executive board
and supervisory board, the liquidator, or the auditor if the
issue of the annual statement of the company has been examined at
the same meeting;
3) the convening of a new meeting.
(4) If a stockholder has submitted a written request to the
executive board at least seven days before the meeting of
stockholders, the executive board must provide to him or her, not
later than three days before the meeting of stockholders, all the
requested information on the issues included on the agenda. The
executive board may only refuse to provide such information if
the reasons specified in Section 283, Paragraph two of this Law
exist. Disputes between stockholders and the executive board on
these issues shall be decided by the meeting of stockholders.
[14 February 2002; 22 April 2004; 16 June 2011; 16 June
2022; 11 May 2023 / Amendment to Clauses 1 and 2 of
Paragraph three regarding the deletion of the words "company
controller" shall come into force on 1 July2023. See
Paragraph 82 of Transitional Provisions]
Section 277. Participation at a
Meeting of Stockholders
(1) Stockholders may participate at a meeting of stockholders
either in person or through a representative. A proxy shall be
drawn up in writing and attached to the minutes of the meeting. A
proxy may be submitted up to the beginning of the meeting. A
special proxy is not necessary for persons who represent a
stockholder on the basis of law. These persons shall present
documents which certify their authorisation. The company shall
ensure that a stockholder can inform the company of the
appointment or removal of a representative through electronic
means of communication.
(2) It is the obligation of members of the executive board and
the auditor, as well as at least one member of the supervisory
board to participate in meetings of stockholders. Non-compliance
with this provision shall not constitute as grounds for the
recognition of the meeting of stockholders as invalid or
contesting the decisions taken thereby.
[14 February 2002; 16 June 2022]
Section 277.1 Remote
Participation and Voting in the Meeting of Stockholders
(1) A stockholder has the right to vote in writing (including
through electronic means) before the meeting of stockholders if
the following conditions are met:
1) the vote has been given in a way which allows the company
to ensure the identification of the stockholder;
2) the vote is received by the company at least one day before
the meeting of stockholders.
(2) A stockholder who has voted before the meeting of
stockholders may request the company to acknowledge the receipt
of the vote. The company shall, immediately after the receipt of
the vote of a stockholder, send an acknowledgement to the
stockholder.
(3) The executive board shall, upon its own initiative or upon
request of the stockholders who jointly represent at least 20 per
cent of the equity capital of the company and the articles of
association do not provide for a smaller norm of representation,
ensure a stockholder with the right to participate or vote in the
meeting of stockholders through electronic means. In such a case,
the executive board shall determine the requirements for the
identification of stockholders and the procedures by which the
stockholders can exercise this right.
(4) It may be determined in the articles of association that a
stockholder has the right to participate or vote in the meeting
of stockholders through electronic means. In such a case the
articles of association shall determine or shall delegate the
executive board to determine the requirements for the
identification of stockholders and the procedures by which the
stockholders can exercise this right.
(5) The right of a stockholder to participate or vote in the
meeting of stockholders through electronic means shall not
restrict the right of the stockholder to participate and vote in
the meeting of stockholders in person.
(6) It may be determined in the articles of association that
the meetings of stockholders shall take place only electronically
and the stockholders participate and vote in the meeting of
stockholders through electronic means. The decision on the
abovementioned amendments to the articles of association is taken
if all of the stockholders with voting rights agree thereto.
(7) The stockholder who votes before the meeting of
stockholders or participates or votes in the meeting of
stockholders through electronic means of communication shall be
considered present at the meeting of stockholders and recorded in
the list referred to in Section 278, Paragraph three of this Law.
In such a case, the list shall additionally indicate the manner
in which the stockholder participates or votes in the meeting of
stockholders.
[20 March 2020]
Section 278. List of
Stockholders
(1) Not later than three days before the meeting of
stockholders, the executive board shall compile a list of
stockholders which shall be accessible to stockholders.
(2) The list shall indicate:
1) the given name, surname, and personal identity number (if
the person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document) of
the stockholder, but for legal persons - the name and
registration number;
2) the category, number and nominal value of stocks owned by
the stockholder;
3) the number of votes arising from the stock owned by the
stockholder.
(3) Prior to the opening of the meeting of stockholders, the
executive board shall compile a list of the stockholders who are
participating in the meeting, indicating the information referred
to in Paragraph two of this Section. In addition, the given name,
surname, and personal identity number (if the person does not
have a personal identity number - the date of birth, the number
and date of issue of a personal identification document, the
country and authority which issued the document) of the
representative of the stockholder (if a proxy has been issued),
but for legal persons - the name (firm name), registration number
and the given name, surname, and personal identity number (if the
person does not have a personal identity number - the date of
birth, the number and date of issue of a personal identification
document, the country and authority which issued the document) of
the representative thereof shall be indicated in the list.
(31) Information on stockholders who own
dematerialised stocks shall be indicated in the list referred to
in Paragraphs one and three of this Section in accordance with
the information provided by the central securities depository in
which the stocks are recorded. The central securities depository
shall provide information on the holders of dematerialised stocks
who own the stocks at the end of the working day after which five
working days still remain until the meeting of stockholders (date
of entry).
(4) The list of stockholders referred to in Paragraph three of
this Section shall be signed by the authorised representative of
the executive board, and the stockholders shall be acquainted
with it prior to the first vote.
[14 February 2002; 15 April 2010; 16 June 2011; 16 June
2022]
Section 279. Voting Rights of
Stockholders
(1) Each minimum nominal value stock with voting rights shall
give the right to one vote at a meeting of stockholders. A
stockholder has voting rights in conformity with the total of the
nominal values of the stock with voting rights owned thereby.
(2) In a meeting of stockholders, those stockholders who are
recorded in the list referred to in Section 278, Paragraph three
of this Law shall have the voting rights.
(3) If the meeting of stockholders has to decide the issue of
terminating the activities of the company, then the holders of
preferred stock shall also have the right to vote on this
issue.
(4) If the meeting of stockholders has to decide issues of the
re-organisation of the company, increase or reduction of the
equity capital, or amendments to the articles of association,
then the holders of preferred stock shall also have the right to
vote on these issues, when such issues may affect their
interests.
[14 February 2002; 16 June 2022]
Section 280. Restrictions on Voting
Rights
(1) The articles of association may provide that only a
certain amount of the nominal value of stock gives a right to one
vote, if such provisions in the articles of association were in
effect prior to the issuance of the stock.
(2) A stockholder shall not have voting rights, if:
1) he or she is a member of the executive board or supervisory
board, liquidator, or auditor - when taking the decision on the
removal thereof, expression of no-confidence, or bringing an
action against him or her;
2) a decision is taken on the rights which the company may use
against him or her;
3) the decision to release him or her from commitments or
liability towards the company is taken;
4) [14 February 2002];
5) the decision to conclude a transaction with the person
related to him or her is taken.
(3) The voting rights of a stockholder may also be restricted
in other cases specified by law.
[14 February 2002; 22 April 2004; 14 June 2012; 11 May 2023
/ Amendment to Clause 1 of Paragraph two regarding the
replacement of the words "auditor or company controller" with the
words "or auditor" shall come into force on 1 July 2023.
See Paragraph 82 of Transitional Provisions]
Section 281. Void Stockholder
Commitments
Commitments shall be void in which a stockholder
undertakes:
1) to always fulfil the instructions of the company or its
bodies;
2) to always accept the proposals of the company or its
bodies;
3) to base their attitude in voting on remuneration.
Section 282. Course of the Meeting
of Stockholders
(1) In the case referred to in Section 269, Paragraph three,
Clause 2 and Section 270, Paragraph four of this Law, the meeting
of stockholders shall be opened by an official of the Commercial
Register Office.
(2) The chairperson of the executive board shall chair the
meeting of stockholders, unless the stockholders elect another
chair of the meeting.
(3) The executive board shall ensure the counting of votes and
recording the minutes of the meeting of stockholders, unless the
stockholders elect another teller of votes and a secretary
(recording secretary) of the meeting.
(4) [16 June 2022]
(5) The meeting of stockholders shall also elect at least one
stockholder with voting rights who shall certify the correctness
of the minutes of the meeting.
(6) Voting at the meeting of stockholders shall be open,
except when a secret ballot is requested by stockholders who
represent at least one tenth of the equity capital.
[14 February 2002; 22 April 2004; 16 June 2011; 15 June
2017; 16 June 2022]
Section 283. Information to be
Submitted to the Meeting of Stockholders
(1) Upon request of stockholders, the executive board has the
obligation to submit to the meeting information on the economic
situation of the company to such an extent as is necessary to
examine the relevant issue on the agenda and to objectively
decide thereon.
(2) The executive board may refuse to provide this information
only if:
1) its disclosure may cause serious losses to the company or
to its transaction partners;
2) such information is not to be disclosed in accordance with
law or the articles of association.
(3) Even if the circumstances referred to in Paragraph two of
this Section exist, the executive board may not refuse to provide
information on:
1) the profit and losses of the company;
2) the solvency of the company;
3) the development perspectives of the company;
4) concluded transactions between the company and
stockholders, a member of the supervisory board or executive
board, or a related person.
(4) Disputes regarding the refusal to disclose information by
the executive board shall be decided by a court.
[14 February 2002; 14 June 2012]
Section 284. Taking of Decisions by
the Meeting of Stockholders
(1) A meeting of stockholders shall take decisions by a
majority of votes of the stockholders with voting rights present
if the law or articles of association does not specify a greater
number of votes.
(2) Decisions on making amendments to the articles of
association, the issuance of convertible debentures, the
reorganisation of the company, entry into a group of companies
agreement, amendment or termination thereof, inclusion of the
company, consent for inclusion and the termination, continuation,
suspension or renewal of activities shall be taken by the meeting
of stockholders if not less than three quarters of the
stockholders with voting rights present vote for them, if the
articles of association do not specify a greater number of
votes.
(3) If there are several categories of stock in the company, a
decision on an issue which affects the rights of stockholders of
the relevant category of stock shall be taken if the stockholders
of each of the relevant categories of stock, by a majority of
votes of the stockholders with voting rights present as specified
by law or the articles of association, vote for it in each of
such groups of stockholders.
(4) A decision of the meeting of stockholders on the company,
members of its executive board and supervisory board, auditor,
and stockholders shall be valid from the moment of its taking,
unless the decision or law stipulates another date for coming
into effect of the decision.
(5) When applying amendments to the articles of association to
the Commercial Register Office, an extract from the minutes of
the meeting of stockholders with the decision to make amendments
to the articles of association and the full text of the new
wording of the articles of association signed by the executive
board and the persons who have signed the relevant minutes of the
meeting of stockholders shall be appended.
[14 February 2002; 22 April 2004; 18 December 2008; 29
November 2012; 2 May 2013; 11 May 2023 / Amendment to
Paragraph four regarding the replacement of the words "auditor,
company controller, and stockholders" with the words "auditor,
and stockholders" shall come into force on 1 July 2023.
See Paragraph 82 of Transitional Provisions]
Section 285. Minutes of the Meeting
of Stockholders
(1) The minutes of the meeting of stockholders shall
indicate:
1) the firm name of the company;
11) the body which convenes the meeting of
stockholders, and the time when the notice on the convening of
the meeting of stockholders is sent;
2) the time and place of the meeting of stockholders;
21) the date of the initial meeting (in the case of
a repeated meeting);
3) the amount of the equity capital and the voting equity
capital of the company;
4) the amount of the equity capital represented at the meeting
of stockholders and the number of votes of stockholders with
voting rights present;
5) the given names and surnames of the chairperson of the
meeting, secretary, tellers of the votes and the shareholders who
will attest to the correctness of the minutes;
6) the agenda of the meeting;
7) the course and content of the discussion of the issues on
the agenda;
8) the decisions taken, indicating the number of votes given
"for" and "against" each decision;
9) the objections of members of the supervisory board or
executive board, the auditor, the liquidator or stockholders.
(2) The minutes shall be signed by the chairperson and
secretary of the meeting of stockholders, and also by at least
one stockholder elected by the meeting - a person who shall
certify the accuracy of the minutes. The original of the minutes
or a derivative the accuracy of which shall be confirmed by the
same persons who signed the original shall be submitted to the
Commercial Register Office.
(3) The minutes shall be accompanied by a list of stockholders
drawn up in accordance with Section 278 of this Law and by the
documents related to the meeting of stockholders.
(4) Stockholders have the right to become acquainted with the
minutes and the documents appended to it and to receive a copy or
an extract from the minutes free of charge.
(5) If the stocks of the company are admitted for trading on a
regulated market or multilateral trading system, the company
shall, within 14 days after the meeting of stockholders, publish
on its website the minutes or an extract therefrom which includes
at least the information specified in Paragraph one, Clauses 4
and 8 of this Section.
[14 February 2002; 16 March 2006; 2 May 2013; 16 June
2022]
Section 286. Declaration of a
Decision Taken by the Meeting of Stockholders as Void
(1) A court may declare a decision taken by the meeting of
stockholders as void if:
1) it is in contradiction to the purposes of the company, the
public interest or morality;
2) it infringes the rights of third parties;
3) it is in contradiction with law or the articles of
association;
4) the provisions of the law or articles of association for
the convening of the meeting or the sending or availability of
the associated information have been violated;
5) a stockholder was unlawfully precluded from participation
in the meeting;
6) a stockholder was unlawfully precluded from becoming
acquainted with draft decisions, the list of stockholders
participating at the meeting or the minutes of the meeting of
stockholders;
7) a stockholder was unjustifiably refused the provision of
information requested thereby, if such has significantly affected
his or her attitude towards the relevant issue;
8) the voting provisions were not complied with at the meeting
and thereby the results of the voting were significantly
affected, or the provisions of law for the number of votes given
were not complied with;
9) the requirements referred to in Section 284, Paragraph
three of this Law have not been complied with.
(2) Declaration of a decision taken by the meeting of
stockholders as void shall not affect the rights of third parties
obtained in good faith.
[14 February 2002; 22 April 2004; 16 June 2022]
Section 287. Persons who have the
Right to Bring an Action to a Court
(1) The following persons may bring an action to a court to
declare a decision taken by the meeting of stockholders as
void:
1) a member of the executive board or supervisory board;
2) any stockholder in the cases referred to in Section 286,
Clauses 1, 2, and 3 of this Law, if he or she has voted against
the contested decision and requested to record it in the minutes,
but, in the case of secret ballot, has expressed objections to
the contested decision and requested to record it in the
minutes;
3) a stockholder who has not participated in the meeting in
the cases referred to in Section 286, Clauses 4 and 5 of this
Law;
4) a stockholder who was not allowed to become acquainted with
the documents specified in law in the case referred to in Section
286, Clause 6 of this Law;
5) a stockholder whose request for information has been
unjustifiably denied in the case referred to in Section 286,
Clause 7 of this Law, if the vote of this stockholder would be
decisive for the voting result;
6) a stockholder who was not given the opportunity to vote or
who contests the right of another stockholder to vote or
otherwise contests the voting procedure in the case referred to
in Section 286, Clause 8 of this Law;
7) an interested stockholder in the case referred to in
Section 286, Clause 9 of this Law.
(2) [15 June 2017]
[14 February 2002; 15 June 2017]
Section 288. Bringing of an
Action
(1) The time limit for bringing an action to declare a
decision of the meeting of stockholders as void shall be three
months from the day when a person became aware or should had
become aware of the decision of the meeting, but not later than a
year from the day the meeting took place.
(2) [15 June 2017]
(3) An action to declare a decision of the meeting of
stockholders as void shall be brought against the company.
(4) If an action is brought by a member of the executive
board, the company shall be represented in court by the
supervisory board.
[15 June 2017]
Section 289. Procedures for the
Enforcement of a Court Ruling to Recognise a Decision of the
Meeting of Stockholders as Void
(1) [15 June 2017]
(2) If a court declares a decision taken by the meeting of
stockholders as void, the company has the obligation to submit to
the Commercial Register Office an application for the amendment
of the entry which was made based on the aforementioned decision
of the meeting of stockholders.
[15 June 2017]
Section 290. Liability for
Unjustified Contesting of a Decision of the Meeting of
Stockholders
If claimants have brought an action in bad faith or due to
gross negligence, they shall be jointly liable for any losses
incurred by the company due to the unjustified contesting of a
decision of the meeting of stockholders.
[14 February 2002]
Section 291. Supervisory Board
The supervisory board is the supervisory body of the company
which represents the interests of the company and, within the
scope determined by this Law and articles of association,
supervises the activities of the executive board and the
development of the company.
[11 May 2023 / The new wording of the Section shall
come into force on 1 July 2023. See Paragraph 81 of
Transitional Provisions]
Section 292. Tasks of the
Supervisory Board
(1) The supervisory board shall have the following tasks:
1) to elect and remove members of the executive board and to
continually supervise the activities of the executive board;
2) to monitor that the business of the company is conducted in
accordance with law, the articles of association and the
decisions of the meeting of stockholders;
21) to approve the general principles of operation
and the development and financial objectives of the company, and
also to supervise the implementation thereof;
22) to monitor the operation of the internal
control and risk management systems;
3) to examine the annual statement of the company and the
proposal of the executive board for the use of the profits and
draw up a report (Section 174);
4) to represent the company before a court in all actions
brought by the company against members of the executive board as
well as in actions brought by the executive board against the
company and to represent the company in other legal relations
with members of the executive board;
5) to approve the concluding of a transaction or to give a
consent to the concluding of a transaction between the company
and member of the executive board or supervisory board, or the
related person, or the auditor;
6) to examine in advance all issues which are within the
competence of the meeting of stockholders or which, pursuant to
the proposal of members of the executive board or supervisory
board, have been proposed for discussions at the meeting, and to
provide its opinion on such issues;
7) to give consent to the decision of the executive board to
increase the equity capital in the case referred to in Section
249, Paragraph four of this Law and make amendments to the
articles of association of the company in the case referred to in
Section 249, Paragraph five of this Law.
(2) Stockholders who jointly represent not less than one tenth
of the equity capital of the company have the right to request
the supervisory board in writing, indicating the reasons, to
examine the activities of the executive board. If the supervisory
board does not carry out such examination or submit a reply
within a month, the stockholders have the right to give this
issue to the meeting of stockholders for examination.
(3) The supervisory board shall provide explanations to the
meeting of stockholders on the report thereof (Section 175), if
it is requested by at least one stockholder.
[14 February 2002; 22 April 2004; 24 April 2008; 14 June
2012; 11 May 2023 / Clauses 2.1 and
2.2 of Paragraph one shall come into force on 1 July
2023. See Paragraph 81 of Transitional Provisions]
Section 293. Rights of the
Supervisory Board
(1) The supervisory board has the right at any time to request
the executive board to report on the situation of the company and
to become acquainted with all activities of the executive
board.
(2) The supervisory board has the right to examine the
company's registers and documents, as well as the cash in hand
and all of the property of the company.
(3) The supervisory board may entrust one of its members to
perform an examination or invite experts to perform the
examination or to clarify separate issues.
(4) The supervisory board has the right to convene a meeting
of stockholders or to request the executive board to convene the
meeting if the interests of the company so require.
(5) The supervisory board does not have the right to decide
issues which are within the competence of the executive
board.
Section 294. Consent of the
Supervisory Board to the Activities of the Executive Board
(1) The articles of association may provide that the executive
board shall require the consent of the supervisory board to
decide on issues of major importance. The following shall be
deemed to be such issues of major importance:
1) acquiring participation in other companies and increasing
or decreasing such participation;
2) acquisition or alienation of undertakings;
3) acquisition or alienation of immovable property or its
encumbering with rights in rem;
4) opening or closing of branches and representative
offices;
5) conclusion of such transactions which exceed the amount
specified in the articles of association or decision of the
supervisory board;
6) issuing of such loans which are not related to the usual
commercial activities of the company;
7) issuing loans to employees of the company;
8) starting new types of activities or ceasing existing
activities;
9) [1 July 2023 / See Paragraph 81 of Transitional
Provisions].
(2) The company may also provide for other issues in its
articles of association for the deciding of which the executive
board must receive the consent of the supervisory board.
(3) If the supervisory board rejects a proposal of the
executive board with respect to the issues referred to in
Paragraphs one and two of this Section, the executive board has
the right to convene an extraordinary meeting of stockholders
which shall decide on the relevant issue.
(4) The fact that the executive board has not received the
consent of the supervisory board shall not be binding on third
parties. The promulgation of the abovementioned fact or the
existence of relevant provisions of the articles of association
shall not be sufficient grounds to recognise this fact as binding
on third parties, except when the person knew that the consent of
the supervisory board was necessary and that it was not
given.
[11 May 2023 / See Paragraph 81 of Transitional
Provisions]
Section 295. Composition of the
Supervisory Board
(1) Only natural persons with the capacity to act may be
members of the supervisory board.
(2) The following may not be members of the supervisory
board:
1) a member of the executive board, the auditor, procurator or
a person with a commercial power of attorney of this company;
2) a member of the executive board of any dependent company of
the company or any person with the right to represent the
dependent company;
3) [22 April 2004].
(3) The articles of association may specify stricter
restrictions for members of the supervisory board.
(4) The minimum number of members of the supervisory board
shall be three.
(5) The maximum number of members of the supervisory board
shall be twenty.
(6) A member of the supervisory board may not entrust the
fulfilment of his or her obligations to another person.
[22 April 2004; 11 May 2023]
Section 296. Election and Removal of
the Members of the Supervisory Board
(1) The supervisory board shall be elected for a period which
is not longer than five years.
(2) A member of the supervisory board may not be elected
without his or her consent. In his or her written consent, the
candidate for member of the supervisory board shall indicate any
potential obstacles for holding the position in accordance with
the provisions of law or the articles of association or certify
that he or she does not have such obstacles.
(21) The Commercial Register Office shall be
submitted a written consent of the member of the supervisory
board in which he or she shall indicate the firm name and the
registration number of the company the member of the supervisory
board of which he or she agrees to become.
(3) [15 June 2017]
(4) A stockholder or group of stockholders are entitled to
nominate their candidates for election to the supervisory board
with such intent that, by dividing the capital with voting rights
represented by the stockholder or group of stockholders by the
number of candidates to be nominated, each of the candidates
would have not less than five per cent of the capital with voting
rights represented at the meeting of stockholders. Each of such
nominated candidates shall be included on the list of candidates
for members of the supervisory board.
(5) Voting shall take place in one ballot for all the
candidates for members of supervisory board included on the list
by all the stockholders voting at the same time. A stockholder is
entitled to give all votes thereof for one or more of the
candidates included on the list in any proportion of whole
numbers.
(6) Those persons who have received the most votes by taking
into account the maximum number of members of the supervisory
board specified in the articles of association shall be
considered elected to the supervisory board. If two or more
candidates for member of the supervisory board have gained an
equal number of votes and therefore it cannot be determined which
of them is to be considered elected, the issue shall be decided
by a vote of the meeting of stockholders for each of these
candidates, and the candidate who has received the highest number
of votes in the repeated ballot shall be considered elected.
(7) A member of the supervisory board may be removed from
their position at any time by a decision of the meeting of
stockholders.
(8) A member of the supervisory board may leave the position
of the member of the supervisory board at any time by submitting
a notice to the company.
(9) If a member of the supervisory board leaves his or her
position or is removed from the position before the expiration of
the term of powers of the supervisory board, new elections of the
members of the supervisory board shall take place in which the
whole composition of the supervisory board shall be
re-elected.
(10) The executive board shall inform the Commercial Register
Office of changes in the composition of the members of the
supervisory board and submit a list of the members of the
supervisory board, a written consent of each member of the
supervisory board and the relevant decision of a meeting of
stockholders or the notice of the relevant member of the
supervisory board.
(11) The company which has one stockholder need not apply the
re-election procedures laid down in Paragraph nine of this
Section. In such case, a member of the supervisory board shall be
elected for a period which is not longer than five years and a
written consent of the member of the supervisory board shall be
submitted to the Commercial Register Office by the new member of
the supervisory board.
[14 February 2002; 22 April 2004; 16 March 2006; 15 April
2010; 29 November 2012; 15 June 2017]
Section 297. Management of the
Supervisory Board
(1) Members of the supervisory board shall elect a chairperson
of the supervisory board and at least one deputy chairperson.
(2) The deputy chairperson of the supervisory board shall
perform the duties of the chairperson of the supervisory board
only if the chairperson of the supervisory board is absent
(illness, official trip, vacation and the like) or has assigned
such a task.
Section 298. Convening of the
Meetings of Supervisory Board
(1) The chairperson of the supervisory board shall convene
meetings of the supervisory board, but in his or her absence or
by assignment - his or her deputy, according to necessity, but
not less than once per quarter.
(2) Every member of the supervisory board, as well as the
executive board, has the right to request the supervisory board
to convene a meeting, substantiating the necessity to convene a
meeting and its purpose.
(3) If the chairperson of the supervisory board does not
fulfil the request for the convening of a meeting of the
supervisory board within two weeks from the time of its receipt,
the initiator of the meeting has the right to convene a meeting
of the supervisory board, explaining the circumstances of the
matter.
Section 299. Taking of Decisions by
Supervisory Board
(1) The supervisory board shall be valid if more than one half
of the members of the supervisory board participate at the
meeting of the supervisory board. If the supervisory board is
composed of fewer members than is provided for in the articles of
association, the quorum shall be determined according to the
number of members of the supervisory board specified in the
articles of association.
(2) The supervisory board shall take its decisions by a simple
majority of votes of those present, if the articles of
association do not specify a greater majority of votes. It may be
determined in the articles of association that in the event of
tied vote, the vote of the chairperson of the supervisory board
shall prevail.
(21) If a member of the supervisory board does not
have the voting rights, the majority of votes shall be determined
according to the votes of the members of the supervisory board
present with the right to vote.
(3) A member of the supervisory board who does not take part
in a meeting of the supervisory board may give his or her vote in
writing, submitting it to another member of the supervisory
board. Voting may be done by telephone or other means only if the
means of communication used allows members of the supervisory
board to simultaneously participate in the discussion of the
issue and the taking the decision, and if such activities are
appropriately documentarily recorded.
(4) Minutes shall be taken of the meetings of the supervisory
board. The following shall be indicated in the minutes:
1) the firm name of the company;
2) the place and time of the meeting of the supervisory
board;
3) the participants at the meeting;
4) the issues on the agenda;
5) the course and content of the discussion of the issues on
the agenda;
6) the results of the voting, indicating the vote of each
member of the supervisory board "for" or "against" each
decision;
7) the decisions taken.
(5) If a member of the supervisory board disagrees with a
decision of the supervisory board and votes against it, his or
her differing view shall be recorded in the minutes of the
meeting of the supervisory board pursuant to his or her
request.
(6) The minutes of the meetings of the supervisory board shall
be signed by the chairperson of the meeting and at least one more
participant to the meeting. The original of the minutes or a
derivative the accuracy of which shall be certified by the
chairperson of the meeting of the supervisory board shall be
submitted to the Commercial Register Office.
[14 February 2002; 16 June 2005; 14 June 2012; 15 June
2017; 20 March 2020]
Section 300. Remuneration for
Members of Supervisory Board
The meeting of stockholders shall determine the remuneration
for the members of the supervisory board.
Section 301. Executive Board
(1) The executive board is the executive body of the company
which manages and represents the company.
(2) The executive board shall supervise and manage the affairs
of the company. It shall be responsible for the commercial
activities of the company and also for accounting in compliance
with law.
(3) The executive board shall manage the property of the
company and shall act with its means according to the
requirements of law, the articles of association, and decisions
of the meetings of stockholders.
Section 302. Right of the Executive
Board to Manage the Company
Members of the executive board shall manage the company only
jointly.
Section 303. Representation Rights
of the Executive Board
(1) All members of the executive board have representation
rights. Members of the executive board shall represent the
company jointly unless the articles of association specify
otherwise.
(2) In the case of joint representation, the members of the
executive board may authorise from among themselves one or more
members of the executive board to conclude specific transactions
or specific types of transactions.
(3) The representation rights of the executive board in
respect of a third party may not be restricted. The rights of the
members of the executive board specified in the articles of
association to represent the company jointly or individually
shall not be deemed to be restrictions on the representation
rights of the executive board within the meaning of this
Section.
(4) In relation to the company, members of the executive board
shall comply with the restrictions on representation which are
specified in the articles of association, decisions of the
meeting of shareholders and of the supervisory board, as well as
the prohibition to perform commercial activities of all types or
specific type or to hold specific positions.
[14 February 2002; 22 April 2004; 29 November 2012]
Section 304. Composition of the
Executive Board
(1) The executive board may consist of one or several members
of the executive board.
(2) Only natural persons with the capacity to act may be
members of the executive board.
(3) The following may not be members of the executive
board:
1) members of the supervisory board of the company;
2) the auditor of the company;
3) [29 November 2012];
4) a member of the supervisory board of the dominant
undertaking of a group of companies.
(4) The articles of association may provide for stricter
restrictions to be imposed on members of the executive board.
(5) [22 April 2004]
[22 April 2004; 29 November 2012; 11 May 2023]
Section 305. Election of Members of
the Executive Board and Determination of Representation
Rights
(1) Members of the executive board shall be elected by the
supervisory board.
(2) A member of the executive board may not be elected without
his or her consent. The member of the executive board shall
indicate in his or her consent the potential obstacles for
holding the position in accordance with Sections 4.1,
4.2, 4.3, 171, and 304 of this Law and the
potential obstacles for the implementation of the right of
representation of the company in accordance with Sections
4.1 and 4.2 of this Law, or certify that he
or she does not have such obstacles.
(21) The Commercial Register Office shall be
submitted a written consent of the member of the executive board
in which he or she shall indicate the firm name and the
registration number of the company the member of the executive
board of which he or she agrees to become.
(3) Members of the executive board shall be elected to
position for five years if the articles of association do not
specify a shorter term.
(4) The supervisory board shall appoint the chairperson of the
executive board from among the members of the executive
board.
(5) [14 February 2002]
[14 February 2002; 16 March 2006; 15 April 2010; 29
November 2012; 2 May 2013; 11 May 2023 / Amendment
regarding the new wording of the second sentence of Paragraph two
shall come into force on 1 August 2023. See Paragraph 83
of Transitional Provisions]
Section 306. Removal of Members of
the Executive Board and Their Right to Leave the Position
(1) Members of the executive board may be removed by the
supervisory board if there are important reasons.
(2) In any case, gross violations of powers, failure to fulfil
or to appropriately fulfil his or her obligations, an inability
to manage the company, or causing harm to the interests of the
company, and also the loss of confidence expressed by a meeting
of stockholders shall be considered as an important reason.
(3) A member of the executive board may leave the position of
the member of the executive board at any time by submitting a
notice thereon to the company.
[14 February 2002; 22 April 2004]
Section 307. Promulgation of Changes
in the Composition of the Executive Board and Representation
Rights
The executive board shall apply for changes in the composition
of the executive board and representation rights to the
Commercial Register Office by submitting a list of members of the
executive board and the relevant decision of the supervisory
board or the notice of the member of the executive board.
[14 February 2002; 22 April 2004]
Section 308. Remuneration of Members
of Executive Board
(1) Members of the executive board have the right to receive
remuneration according to the scope of their obligations and the
financial situation of the company.
(2) The amount of remuneration for members of the executive
board shall be determined by the supervisory board.
[14 February 2002]
Section 309. Restrictions on Members
of the Executive Board of the Company
(1) [14 February 2002]
(2) [14 February 2002]
(3) If there is a conflict of interest between the company and
any member of the executive board or the related person, the
issue shall be decided at an executive board meeting in which the
interested member of the executive board shall not have voting
rights, and this shall be noted in the minutes of the executive
board meeting. A member of the executive board has the obligation
to notify of such interests before the beginning of an executive
board meeting.
(4) The provisions of Paragraph three of this Section shall
also apply to such members of the executive board who are a
relative of the interested member of the executive board up to
the second degree of kinship, the spouse or brother-in-law or
sister-in-law up to the first degree of affinity, or a person
with whom he or she has a shared household.
(5) The failure to comply with the requirements of this
Section shall not affect the validity of the transaction
concluded between the company and a member of the executive board
or the related person. A member of the executive board who
violates the requirement of this Section shall be liable for the
losses caused to the company.
[14 February 2002; 14 June 2012]
Section 310. Taking of Decisions by
Executive Board
(1) The executive board shall be valid if more than one half
of the members of the executive board participate in the meeting
of the executive board. If a specific number of the members of
the executive board is provided for in the articles of
association and the executive board has fewer members than
provided for in the articles of association, the quorum shall be
determined according to the number of the members of the
executive board laid down in the articles of association.
(2) The executive board shall take its decisions with a simple
majority of votes of those present, if the articles of
association do not specify a greater majority of votes. It may be
determined in the articles of association that the vote of the
chairperson of the executive board shall prevail in the event of
a tied vote.
(21) If a member of the executive board does not
have the voting rights, the majority of votes shall be determined
according to the votes of the members of the executive board
present.
(3) The executive board meetings shall be recorded in minutes.
The following shall be indicated in the minutes:
1) the firm name of the company;
2) the place and time of the executive board meeting;
3) the participants at the meeting;
4) the issues on the agenda;
5) the course and content of the discussion of the issues on
the agenda;
6) the results of the voting, indicating the vote of each
member of the executive board "for" or "against" each
decision;
7) the decisions taken.
(4) If a member of the executive board disagrees with a
decision of the executive board and votes against such, his or
her different opinion shall be recorded in the minutes of the
executive board meeting at his or her request.
(5) The minutes of executive board meetings shall be signed by
the chairperson of the meeting and at least one more participant
to the meeting.
[16 June 2005; 14 June 2012; 15 June 2017; 20 March
2020]
Section 310.1
Invalidation of the Decision Taken by the Executive Board to
Increase the Equity Capital
(1) A court may declare the decision of the executive board to
increase the equity capital as void in the cases referred to in
Section 286, Paragraph one, Clauses 1, 2, and 3 of this Law, and
also if the procedures for increasing the equity capital have
been violated.
(2) Any stockholder may bring an action to a court regarding
the recognition of the decision of the executive board to
increase the equity capital as invalid.
(3) The term referred to in Paragraph two of this Section for
bringing an action shall be three months from the day when the
stockholder became aware or should have become aware of the
decision of the executive board, but not more than a year from
the day of taking the decision.
[24 April 2008]
Section 310.2 Procedures
for the Enforcement of a Court Ruling to Recognise the Decision
of the Executive Board to Increase the Equity Capital as Void
[15 June 2017]
Section 310.3 Liability
for Unjustified Contesting of the Decision of the Executive Board
to Increase the Equity Capital
If the claimants have brought an action in bad faith or due to
gross negligence, they shall be jointly liable for the losses
caused to the company due to unjustified contesting of the
decision of the executive board to increase the equity
capital.
[24 April 2008]
Section 311. Report of Executive
Board
(1) The executive board has the obligation to provide a
written report on its activities to the supervisory board once
every quarter, but at the end of the year - to a meeting of
stockholders. The report shall reflect:
1) the results of the commercial activities of the
company;
2) the economic situation of the company, profitability,
turnover, and movement of securities;
3) the circumstances which could have an impact on the
economic situation of the company;
4) the planned policies for commercial activities of the
company in the next reporting period.
(2) The executive board shall inform the supervisory board
also of other significant aspects of the company's
activities.
Division
XIV
TERMINATION OF ACTIVITIES AND LIQUIDATION OF CAPITAL COMPANY
Section 312. Grounds for Terminating
the Activities of a Capital Company
(1) The activities of a capital company (hereinafter in this
Division - the company) shall be terminated:
1) by a decision of shareholders;
2) by a court ruling;
3) with the commencement of bankruptcy procedures;
4) upon expiry of the time limit specified in the articles of
association (if the company was founded for a definite
period);
5) having achieved the purposes specified in the articles of
association (if the company was founded to achieve specific
purposes);
6) in other cases as specified by law or the articles of
association.
(2) The termination of the activities of a company shall be
applied for entering in the Commercial Register by indicating in
the application the reason for terminating the activities of the
company.
[15 June 2017]
Section 313. Termination of
Activities of the Company based on a Decision of Shareholders
(1) The decision to terminate the activities of the company
shall be taken at a meeting of shareholders.
(2) The executive board has the obligation to provide to the
shareholders a report on the previous reporting year and the
activities of the company in the current year.
(3) In the report on economic activities, the time limit by
which the company may satisfy the claims of its creditors shall
be indicated.
Section 314. Termination of
Activities of the Company based on a Court Ruling
(1) The activities of the company may be terminated based on a
court ruling if:
1) the documents of incorporation of the company are in
contradiction to law;
2) the equity capital of the company does not meet the
requirements of law;
3) the company has not submitted to the Commercial Register
Office the information or documents required by law;
4) the shareholders have not taken the decision to terminate
the activities of the company in cases when they should have done
so in accordance with law or the articles of association;
5) [29 November 2012];
51) the limited liability company referred to in
Section 185.1, Paragraph one of this Law has not
increased the equity capital according to the provisions of
Section 185.1, Paragraph six of this Law;
6) in other cases specified by law.
(2) An action to a court may be brought by a member of the
executive board or supervisory board, a shareholder, the
Commercial Register Office, and third parties whose lawful rights
have been infringed.
(21) The third party whose lawful rights have been
infringed may bring an action to a court in the case referred to
in Paragraph one, Clause 2 or 3 of this Section.
(3) The Commercial Register Office may bring an action to a
court in the cases referred to in Paragraph one, Clauses 1, 3,
and 5.1 of this Section if the company has not
eliminated the indicated deficiencies within three months after
receiving a written warning.
(4) Until the moment when a ruling on the termination of the
activities of the company is given, a court may specify a time
limit by which the company must rectify the deficiencies which
form the grounds for the termination of its activities. The time
limit for the rectification of deficiencies shall not exceed
three months.
[22 April 2004; 15 April 2010; 29 November 2012; 15 June
2017]
Section 314.1 Termination
of the Activities of the Company on the Basis of a Decision of
the Commercial Register Office or Tax Authority
(1) Activities of the company may be terminated based on a
decision of the Commercial Register Office if:
1) the executive board of the company has not had the right of
representation for more than three months and the company has not
rectified the indicated deficiency within three months after
receipt of a written warning;
2) the company cannot be reached at its legal address in
accordance with Section 12, Paragraph four of this Law, and it
has not eliminated the indicated deficiency within two months
after receipt of a written warning.
(2) Activities of the company may be terminated on the basis
of a decision of the tax authority if:
1) the company has not submitted the annual statement within
one month after the administrative penalty was imposed and at
least six months have passed since the violation was
committed;
2) the company has not submitted the returns for a period of
six months provided for in tax laws within one month after
administrative penalty was imposed;
3) activities of the company have been suspended on the basis
of a decision of the tax authority, and the company has not
rectified the indicated deficiency within three months after
activities thereof were suspended.
(3) The decision of the Commercial Register Office or tax
authority to terminate activities of the company shall enter into
effect within one month after notification thereof to the
company, if the decision has not been contested or appealed in
accordance with the procedures specified by law.
(4) Paragraph one and Paragraph two, Clause 2 of this Section
shall not be applied, if an entry has been made in the Commercial
Register on the suspension of the activities of a merchant on the
basis of a decision of the merchant.
[29 November 2012; 15 June 2017]
Section 315. Termination of the
Activities of the Company in the Case of Bankruptcy
Procedures by which the activities of the company shall be
terminated in the case of bankruptcy shall be governed by a
separate law.
Section 316. Continuation of the
Activities of the Company after the Expiration of the Time Limit
for Activities or after the Achievement of the Purpose
If the term for the activities of the company, as specified in
the documents of incorporation, expires or if the specified
purpose has been achieved, the shareholders may take the decision
to continue activities, or to reorganise the company and make the
necessary amendments to the incorporation documents.
Section 317. Liquidation
(1) In the case of the termination of the activities of the
company, it shall be liquidated if the law does not specify
otherwise.
(2) Liquidation of the company shall not take place and the
Commercial Register Office shall take the decision to delete the
company from the Commercial Register, if none of the persons
interested in the liquidation of the company submits an
application to a court of the Commercial Register Office for the
appointment of a liquidator and insolvency proceedings have not
been applied in relation to the company.
(3) Property which remains after deletion of the company from
the Commercial Register falls within the jurisdiction of the
State.
[29 November 2012; 6 July 2021]
Section 318. Appointment of
Liquidators
(1) Liquidation shall be conducted by the members of the
executive board if the articles of association, the decision of a
meeting of shareholders or a court ruling does not specify
otherwise.
(2) If a meeting of shareholders appoints a liquidator, it
shall determine the amount and procedures for the disbursement of
remuneration of the liquidator.
(3) If the activities of the company are terminated on the
basis of a court ruling and the person interested in the
liquidation of the company has recommended a candidate for the
liquidator to the court, or if it is requested by the
shareholders who represent not less than one tenth of the equity
capital, the liquidator shall be appointed and the amount and
procedures for the disbursement of the remuneration of the
liquidator shall be determined by the court.
(4) One liquidator or several liquidators may be
appointed.
[29 November 2012]
Section 318.1 Appointing
a Liquidator on the Basis of an Application of the Person
Interested in the Liquidation of the Company
(1) A liquidator may be appointed by a court or the Commercial
Register Office on the basis of an application of the person
interested in liquidation.
(2) If an action has been brought to a court regarding the
termination of activities of the company, any person interested
in liquidation of the company may recommend a candidate for the
liquidator to the court.
(3) If the activities of the company have been terminated on
the basis of a decision of the Commercial Register Office or tax
administration, or activities of the company have been terminated
on the basis of a court ruling, and none of the interested
persons has recommended to court a candidate for the liquidator,
the Commercial Register Office shall, after an entry on the
termination of activities of the company has been made in the
Commercial Register, publish on its website a notice on the
termination of the activities of the company. In the notice the
persons interested in the liquidation of the company shall be
invited to submit an application to the Commercial Register
Office for the appointment of a liquidator within one month after
the day when it was published.
(4) The person interested in the liquidation of the company
shall indicate the place and time limit for applying claims of
creditors in the application referred to in Paragraphs two and
three of this Section. The application shall be accompanied by
the document referred to in Section 320, Paragraph one, Clause 2
of this Law.
(5) The Commercial Register Office shall make an entry on the
appointment of a liquidator on the basis of the application
submitted by the person interested in liquidation of the company
for the appointment of a liquidator.
(6) The Commercial Register Office shall publish on its
website a notice on the appointment of a liquidator.
(7) The amount and procedures for the disbursement of the
remuneration of a liquidator shall be determined by the person
interested in liquidation of the company which has submitted the
application referred to in Paragraph five of this Section.
[29 November 2012; 15 June 2017; 6 July 2021]
Section 318.2 Covering
the Costs of Liquidation if the Liquidator has been Appointed on
the Basis of an Application of the Person Interested in
Liquidation of the Company
(1) The costs of liquidation shall be covered by the person
interested in the liquidation of the company who has submitted
the application referred to in Section 318.1,
Paragraph five of this Law.
(2) The costs of liquidation covered by the person interested
in liquidation of the company shall be repaid from the property
of the company.
[29 November 2012]
Section 319. Requirements to be Set
for Liquidators
(1) A natural person with the capacity to act may be a
liquidator.
(2) [15 April 2010]
(3) A person who may not be a member of the executive board of
the company in accordance with the restrictions specified in the
first sentence of Section 221, Paragraph four and Section 304,
Paragraph three of this Law may not be a liquidator.
(4) The liquidator has the obligation to notify shareholders
of the potential obstacles for holding the position in accordance
with Sections 4.1, 4.2, 4.3,
171, 221, and 304 of this Law and the potential obstacles for
exercising the right of representation of the company in
accordance with Sections 4.1 and 4.2 of
this Law, or certify that he or she does not have such
obstacles.
[15 April 2010; 29 November 2012; 11 May 2023 / The
new wording of Paragraph four shall come into force on 1 August
2023. See Paragraph 83 of Transitional Provisions]
Section 320. Application for the
Termination of the Activities of the Company and the Liquidation
Thereof
(1) The executive board shall, within three days from the date
of taking the decision to terminate the activities of the
company, submit the decision for entry in the Commercial
Register. The place and time limit for applying claims of
creditors shall be indicated in the application. The following
shall be attached to the application:
1) an extract of the minutes of the meeting of shareholders
with the decision to terminate the activities of the company;
2) a written consent of each liquidator to be the liquidator.
The liquidator shall indicate in the written consent the firm
name and the registration number of the company the liquidator of
which he or she agrees to become.
(2) If the activities of the company are terminated on the
basis of a court ruling, the court shall send the relevant ruling
for making an entry in the Commercial Register within three days
after the day of entry into effect of the ruling.
(21) If the activities of the company are
terminated on the basis of a decision of the tax authority, the
tax authority shall send the relevant decision for making an
entry in the Commercial Register within three days after the day
of entry into effect of the decision.
(3) If liquidation is conducted by members of the executive
board, this fact shall be indicated in the application or the
court ruling, and the documents referred to in Paragraph one,
Clause 2 of this Section need not be appended thereto.
[15 April 2010; 29 November 2012; 2 May 2013; 15 June
2017]
Section 321. Removal of
Liquidators
(1) A liquidator may be removed by a decision of the meeting
of shareholders, except in the case referred to in Paragraph
3.1 of this Section.
(2) A liquidator may be removed by a court ruling based on an
application of the shareholder or a third party if there are
important reasons for it.
(3) A liquidator appointed by a court may only be removed by a
court ruling based on an application of the shareholder or a
third party if there are important reasons for it, and by
concurrently appointing a new liquidator.
(31) A liquidator appointed on the basis of an
application of the person interested in liquidation of a company
to the Commercial Register Office may be suspended by the
interested person who appointed the liquidator by appointing a
new liquidator.
(4) The decision to remove a liquidator shall be submitted by
the new liquidator to the Commercial Register Office within three
days from the day when the decision was taken.
[29 November 2012]
Section 322. Rights and Obligations
of Liquidators
(1) A liquidator shall have all the rights and obligations of
the executive board and supervisory board which are not in
contradiction with the purpose of liquidation.
(2) A liquidator shall recover debts, sell property of the
company, and satisfy claims of creditors.
(3) A liquidator may only conclude such transactions as are
necessary for the liquidation of the company.
(4) If the liquidation of the company is conducted by several
liquidators, they have the right to represent the company only
jointly. Liquidators may authorise one or several persons from
among themselves for the performance of particular activities or
particular types of activities.
(5) Any restrictions on the representation of a liquidator
shall not be binding on third parties.
(6) During the liquidation, the word "likvidējamā" [under
liquidation] shall be added to the firm name of the company.
[29 November 2012; 16 June 2022]
Section 323. Submission of an
Insolvency Application
If it is found during the course of the liquidation that the
property of the company is not sufficient to satisfy all the
legitimate claims of creditors, the liquidator has the obligation
to submit an insolvency application in accordance with the
procedures specified by law.
Section 324. Informing the
Creditors
(1) The Commercial Register Office shall publish on its
website a notice on the termination of activities and
commencement of liquidation of the company.
(2) A liquidator shall, not later than on the day of
publication of the notice referred to in Paragraph one of this
Section, send a notice on the commencement of liquidation to all
known creditors of the company.
(3) In the notice referred to in Paragraphs one and two of
this Section and Section 318.1, Paragraph six of this
Law, the creditors of the company shall be invited to submit
their claims within one month after the day when the notice has
been published if a longer term for submissions by creditors has
not been specified in the decision of a meeting of shareholders
or the court ruling.
(4) [15 June 2017]
[15 April 2010; 29 November 2012; 15 June 2017; 6 July
2021]
Section 325. Submission of
Claims
Creditors shall submit their claims against the company to the
liquidator within the specified term. In a claim, the content,
justification, and amount of the claim shall be indicated, and
the documents on which the claim is based shall be appended
thereto.
Section 326. Liquidation Initial
Financial Statement
[15 June 2017]
Section 327. Protection of
Creditors
(1) If a known creditor has not submitted his or her claim,
does not accept fulfilment or the commitment is not yet due for
fulfilment, the amounts due to him or her shall be deposited at a
sworn notary according to the legal address of the company.
(2) When a disputable claim of a creditor exists, the property
of the company may be divided between the shareholders only if
the relevant creditor is given security.
[29 November 2012]
Section 328. Closing Financial
Statement and Plan for the Division of Property
(1) After the claims of creditors have been satisfied or the
money due to them are deposited, and the liquidation expenditures
have been covered, the liquidator shall draw up the liquidation
closing financial statement and plan for the division of the
remaining property in which a liquidation quota shall be
determined.
(2) An auditor shall review the liquidation closing financial
statement and the plan for the division of the remaining
property. For limited liability companies, a review by an auditor
shall be conducted if, in accordance with the articles of
association of the company, it is provided that the annual
statement of the company shall be reviewed by an auditor or if it
is so decided by a meeting of shareholders.
(3) The liquidator shall send all shareholders the liquidation
closing financial statement and the plan for the division of the
remaining property of the company. A notice shall be sent to
holders of the bearer stocks in accordance with the procedures
laid down in Section 273 of this Law by indicating the place
where the liquidation closing financial statement and the plan
for the division of the remaining property of the company are
available.
(4) If violations of the law, the articles of association or
the decisions of a meeting of shareholders have been made in the
preparation of the liquidation closing financial statement and
the plan for the division of the remaining property of the
company, a court may, based on a request of an interested person,
decide on the preparation of a new liquidation closing financial
statement and plan for the division of the remaining property of
the company or the taking of additional liquidation actions. The
term for bringing an action shall be two months from the day when
the liquidation closing financial statement and the plan for the
division of the remaining property of the company are sent to the
shareholders, but as regards the holders of the bearer stocks -
two months from the day of sending the notice.
[14 February 2002; 29 November 2012; 16 June 2022]
Section 329. Storage of Company
Documents
A liquidator shall ensure the preservation of and access to
the documents of the company in accordance with the provisions of
the Archives Law. The liquidator shall transfer the documents of
the company for storage to one of the shareholders of the company
or a third party in Latvia, agreeing upon the place of storage
thereof with the National Archives of Latvia. Documents of the
company with archival value shall be transferred for storage to
the National Archives of Latvia in accordance with the provisions
of the Archives Law. Expenditures related to the transfer of
documents for storage to the National Archives of Latvia shall be
covered from the property of the company to be liquidated.
[29 November 2012]
Section 330. Division of the
Remaining Property of the Company
(1) The remaining property of the company shall be divided
between the shareholders under the plan for the division of the
remaining property prepared by the liquidator in proportion to
the shares owned by each shareholder, unless the document of
incorporation specify otherwise.
(2) The property may be divided not earlier than two months
from the day when the liquidation closing financial statement and
the plan for the division of the remaining property of the
company are sent to the shareholders or the notice on the
possibility to access them is sent to the holders of
dematerialised stocks.
(21) The property may be divided before the time
limit laid down in Paragraph two of this Section, if all
shareholders agree thereto.
(3) [15 April 2010]
(4) All disbursements to the shareholders shall be made in
cash, unless the articles of association specify otherwise.
(5) Liquidators also may choose not to sell property if it is
not necessary for the satisfaction of the claims of creditors and
if it is specified in the decision to terminate the activities of
the company.
[14 February 2002; 15 April 2010; 15 June 2017; 16 June
2022]
Section 331. Continuation of the
Activities of the Company
(1) If the company is liquidated on the basis of the
provisions referred to in the articles of association of the
company for the termination of the activities of the company or
the decision taken by a meeting of shareholders, the shareholders
may, until the commencement of the division of property, take the
decision to continue the activities of the company or its
reorganisation. The decision shall be considered as taken if it
is voted for by the shareholders present with the same number of
votes as is provided for taking the decision to terminate the
activities of the company.
(2) When taking the decision to continue the activities of the
company, the executive board and supervisory board of the company
shall also be formed concurrently and the equity capital of the
company shall be reduced in conformity with the value of the
remaining property. If the value of the remaining property is
less than the minimum amount of equity capital specified for the
company by law, the meeting of shareholders shall decide on an
increase of the equity capital.
(3) A liquidator shall submit an application to the Commercial
Register Office for the continuation of the activities by
appending the decision to continue the activities thereto. The
decision on the continuation of the activities of the company
shall come into effect after entering thereof in the Commercial
Register.
[15 June 2017]
Section 332. Deletion from the
Commercial Register
(1) After the division of the remaining property of the
company, a liquidator shall submit an application for the
completion of liquidation to the Commercial Register Office. The
liquidation closing financial statement and the plan for the
division of the remaining property of the company, as well as the
opinion of the auditor (if a review of the auditor was conducted)
shall be appended to the application.
(2) In the application, a liquidator shall certify that:
1) the liquidation closing financial statement and the plan
for the division of the remaining property of the company have
not been contested before a court or that an action has been
rejected;
2) all the claims of creditors have been satisfied or that the
amounts to meet the claims were deposited and all liquidation
expenditure has been covered;
3) the documents of the company have been transferred to the
archive for storage;
4) in the case referred to in Section 330, Paragraph
2.1 of this Law, all shareholders have agreed to the
division of the remaining property of the company prior to the
term specified in Section 330, Paragraph two of this Law.
[14 February 2002; 15 April 2010]
Section 333. Liability of
Liquidators
(1) A liquidator shall be liable for any losses caused due to
his or her fault.
(2) If there are several liquidators, they shall be jointly
liable for the losses caused due to their fault.
Division
XIV1
Suspension and Renewal of Activities of a
Merchant
[29 November 2012 /
Division shall come into force on 1 January 2014. See
Paragraph 26 of Transitional Provisions]
Section 333.1 Basis for
the Suspension and Renewal of Activities
Activities of a merchant may be suspended and renewed:
1) by a decision of the merchant;
2) by a decision of the tax authority;
3) by a ruling made within criminal proceedings.
Section 333.2 Entry on
the Suspension and Renewal of Activities
(1) Activities of a merchant shall be suspended from the day
when information on the suspension of activities of the merchant
has been entered in the Commercial Register.
(2) Activities of a merchant shall be renewed from the day
when information on the renewal of activities of the merchant has
been entered in the Commercial Register.
Section 333.3 Suspension
of Activities on the Basis of a Decision of the Merchant
(1) A merchant may take the decision to suspend activities
if:
1) it does not have tax debts and it has settled tax
liabilities for the period when the activities are suspended;
2) it does not have employees;
3) it has submitted the annual statement or, in the cases
specified by law, a financial statement on the last reporting
year;
4) it has submitted a report on economic activities to the tax
authority for the period after the end of the preceding reporting
year;
5) it has satisfied the claims of creditors regarding
commitments which fall due before or during the period when the
economic activities are suspended;
6) it has secured the applied claims of creditors in
accordance with the procedures specified in Section
333.4 of this Law which fall due before or during the
time period of suspending the activities of the merchant.
(2) Activities of the merchant shall be suspended for three
years from the day when an entry has been made in the Commercial
Register, if another time limit for suspending the activities has
not been specified in the decision to suspend activities.
(3) Suspension of activities shall be applied for entry in the
Commercial Register.
(4) An application of a partnership shall be signed by all
members.
(5) An extract from the minutes of the meeting of shareholders
(stockholders) with the decision to suspend activities of a
capital company shall be appended to the application of the
capital company.
(6) [2 May 2013]
[2 May 2013; 15 June 2017; 6 July 2021 / Amendment
regarding the deletion of the second sentence of Paragraph three
shall come into force on 1 July 2023. See Paragraph 63 of
Transitional Provisions]
Section 333.4 Protection
of Creditors
(1) Before taking the decision to suspend activities, the
merchant shall inform all known creditors and the Commercial
Register Office in writing of the intent to suspend the
activities. The Commercial Register Office shall publish on its
website a notice on the merchant's intention to suspend
activities. It shall indicate the place and term for the
submission of the claims of creditors which may not be shorter
than one month from the day when the notice has been
published.
(2) Commitments of a merchant which fall due during the period
when the activities are suspended shall be deemed as such which
fall due before the day when the decision to suspend activities
has been taken.
(3) If a creditor requests it and has applied a claim within
the time limit specified in Paragraph one of this Section, the
merchant shall secure such claims of creditors which fall due
after the period when the activities of the merchant are
suspended.
[29 November 2012; 6 July 2021 / The new wording of
Paragraph one shall come into force on 1 July 2023. See
Paragraph 63 of Transitional Provisions]
Section 333.5 Renewal of
Activities on the Basis of a Decision of the Merchant
(1) If activities of a merchant have been suspended on the
basis of a decision of the merchant, the merchant may take the
decision to renew activities prior to the expiry of the term
referred to in Section 333.3, Paragraph two of this
Law. Renewal of activities shall be applied for entry in the
Commercial Register.
(2) After expiry of the term specified in the decision to
suspend activities or, if a term has not been indicated in the
decision, after expiry of the term referred to in Section
333.3, Paragraph two of this Law, an official of the
Commercial Register Office shall, without taking a separate
decision, make an entry in the Commercial Register on the renewal
of the activities of the merchant.
(3) [2 May 2013]
[2 May 2013 / See Paragraph 34 of the Transitional
Provisions]
Section 333.6 Suspension
and Renewal of Activities on the Basis of a Decision of the Tax
Authority
Suspension and renewal of the activities of a merchant on the
basis of a decision of the tax authority shall be governed by tax
laws.
Part C
REORGANISATION OF COMMERCIAL COMPANIES
[11 May 2023]
Division
XV
GENERAL PROVISIONS FOR THE REORGANISATION OF COMMERCIAL
COMPANIES
[11 May 2023]
Section 334. Definition and Types of
Reorganisation
(1) A commercial company (hereinafter in this Part - the
company) may be reorganised by way of merging, division or
restructuring.
(2) Companies involved in the reorganisation process may be
companies of the same type or different types if the law does not
specify otherwise.
[11 May 2023]
Section 335. Merging of
Companies
(1) Merging of companies may take the form of acquisition or
consolidation.
(2) Acquisition is a process in which one or more companies
(the companies to be acquired) transfer all of their property to
another already existing company (the acquiring company).
(3) Consolidation is a process in which two or more companies
(the companies to be acquired) transfer all of their property to
a company to be newly founded (the acquiring company).
(4) In the case of merging, the company to be acquired shall
cease to exist without liquidation procedures.
(5) In the case of merging, all the rights and commitments of
the company to be acquired shall be transferred to the acquiring
company.
(6) In the case of merging, the stockholders, shareholders or
members (hereinafter in this Part - the shareholders) of the
company to be acquired shall become shareholders of the acquiring
company.
[11 May 2023]
Section 336. Division of
Companies
(1) Division is a process in which the company (the company to
be divided) transfers all of its property to one or more other
companies (the acquiring companies) through splitting up or
divestiture.
(2) In the case of splitting up, the company to be divided
shall transfer all of its property to two or more acquiring
companies and ceases to exist without liquidation procedures.
(3) In the case of divestiture, the company to be divided
shall transfer a part of its property to one acquiring companies
or more such companies. In the case of divestiture, the company
to be divided shall continue to exist.
(4) In the case of division, all shareholders of the company
to be divided shall become shareholders of the acquiring
companies. If all shareholders agree thereto, they may agree on a
different composition of shareholders in the acquiring
companies.
(5) In the case of divestiture, the company to be divided may
also become the sole shareholder of the acquiring company.
(6) The acquiring company may be an already existing company
or a company to be newly founded.
[11 May 2023]
Section 337. Restructuring of
Companies
(1) Restructuring is a process in which the company changes
the type of company while maintaining its status of the holder of
rights.
(2) Until the moment when the reorganisation enters into
effect, the company shall be considered as the company to be
restructured, but from the moment when the reorganisation enters
into effect, it shall be considered as the acquiring company.
[11 May 2023]
Division
XVI
REORGANISATION PROCEDURES
[11 May 2023]
Section 338. Reorganisation
Agreement
(1) If two or more already existing companies participate in
the reorganisation process, they shall enter into a
reorganisation agreement (hereinafter also - the agreement). The
agreement shall be entered into in writing.
(2) The agreement shall indicate:
1) the firm names, legal addresses, and registration numbers
of all companies involved in the reorganisation, and, if a new
company is founded, the firm name and legal address of the
acquiring company;
2) the capital share (stock) exchange coefficient and amount
of premiums (if such are provided for) of the companies;
3) the division of the capital shares (stocks) among the
shareholders of the acquiring company;
4) the provisions for the transfer of the capital shares
(stocks) of the acquiring company to the shareholders of the
company to be acquired, divided or restructured;
5) the amount of compensation to shareholders in accordance
with Section 353 of this Law;
6) the period from which the transferred capital shares
(stocks) give the right to receive dividends or profit share from
the acquiring company, and any provisions affecting this period
(if any);
7) the rights granted by the acquiring company to the holders
of the capital shares (stocks) of each category of capital shares
(stocks) and debenture holders who own convertible debentures of
the company to be acquired, divided, or restructured;
8) the rights granted by the acquiring company to the members
of the supervisory and executive bodies of the company to be
acquired, divided, or restructured;
9) the day from which the transactions of the company to be
acquired, divided, or restructured shall be regarded as
transactions of the acquiring company in the accounting of the
acquiring company;
10) the consequences of reorganisation for the employees of
the company to be acquired, divided, or restructured;
11) the actions to be taken in the reorganisation process and
the terms for their taking.
(3) If the agreement provides for suspensive conditions and
they do not set in within three years from the day of entering
into the agreement, each company involved in the reorganisation
process may unilaterally withdraw from the agreement by notifying
other contracting parties thereof not later than six months in
advance, unless the agreement provides for a shorter notice
period.
(4) Each company involved in the reorganisation process shall
submit to the Commercial Register Office an application for the
commencement of reorganisation accompanied by the agreement or
draft agreement. If amendments are made to the agreement or draft
agreement before the meeting of shareholders (stockholders)
(hereinafter in this Part - the meeting of shareholders)
regarding the decision on the reorganisation, the agreement or
draft agreement need not be promulgated repeatedly.
[11 May 2023 / See Paragraph 77 of Transitional
Provisions]
Section 339. Reorganisation
Prospectus
(1) Each company involved in the reorganisation process shall
prepare in writing a reorganisation prospectus (hereinafter in
this Part - the prospectus). The prospectus shall explain the
terms of the agreement, legal and economic aspects of the
reorganisation, and the impact of the reorganisation on the
future activities of the company.
(2) In addition to the information referred to in Paragraph
one of this Section, the prospectus shall indicate the
following:
1) the capital share (stock) exchange coefficient, the amount
of premiums (if such are provided for), and the amount of
compensation to shareholders;
2) the method or methods used to determine the capital share
(stock) exchange coefficient, the amount of premiums, and the
amount of compensation;
3) if the company has used several methods - the capital share
(stock) exchange coefficient, the amount of premiums, and the
amount of compensation obtained by using each method, and the
relative significance thereof when determining the values
referred to in Clause 1 of this Paragraph;
4) whether the companies involved in the reorganisation have
used different valuation methods;
5) special difficulties encountered by the company when
applying the selected methods to valuation.
(3) Companies may prepare a joint prospectus. In this case,
each company involved in the reorganisation process shall
indicate in the prospectus the information referred to in
Paragraphs one and two of this Section.
(4) The company need not prepare a prospectus if all
shareholders agree thereto.
[11 May 2023]
Section 340. Review by an
Auditor
(1) A sworn auditor or a commercial company of sworn auditors
(hereinafter - the auditor) shall review the agreement or draft
agreement in the company involved in the reorganisation. A joint
auditor may review the agreement or draft agreement in all
companies involved.
(2) The auditor shall not review the reorganisation agreement
or draft agreement if all shareholders agree thereto.
(3) The companies participating in the reorganisation process
shall ensure that the auditor has access to all the documents and
information which have significance for the performance of the
obligations of the auditor.
(4) The auditor shall be liable for losses caused due to his
or her fault while conducting the review.
[11 May 2023]
Section 341. Opinion of the
Auditor
(1) The auditor shall draw up a written opinion on the results
of the review of the agreement or draft agreement and submit it
to the company.
(2) The opinion shall explain whether, in the auditor's
opinion, the amount of compensation for employees determined by
the company, the capital share (stock) exchange coefficient, and
the amount of premiums are considered to be appropriate
compensation. In order to evaluate this, the opinion of the
auditor shall indicate the following:
1) the method or methods used to determine the amount of
compensation for shareholders, the capital share (stock) exchange
coefficient, and the amount of premiums, and whether the
respective methods are appropriate;
2) if the company has used several methods - the capital share
(stock) exchange coefficient, the amount of premiums, and the
amount of compensation obtained by using each method, and the
relative significance thereof when determining the respective
values;
3) whether the companies involved in the reorganisation have
used different valuation methods and whether the use of different
methods has been justified;
4) the valuation difficulties encountered by the auditor when
preparing the opinion;
5) whether all necessary documents have been submitted to the
auditor.
[11 May 2023]
Section 342. Access to
Reorganisation Documents
(1) The company shall ensure that shareholders have continuous
and free electronic access (including the possibility to save and
print) to the following documents:
1) the agreement or draft agreement;
2) the prospectus;
3) the opinion of the auditor;
4) the annual statements of all companies involved in the
reorganisation process for the last three reporting years;
5) the report on economic activities of the company prepared
not earlier than three months before the submission of the
application for the commencement of reorganisation to the
Commercial Register Office if the previous annual statement has
been drawn up more than six months before the submission of the
application.
(2) A joint-stock company shall make the documents referred to
in Paragraph one of this Section available to stockholders not
later than one month, but a limited liability company and a
partnership shall make them available not later than two weeks
until the day when the decision on reorganisation is intended to
be taken and not later than one year after taking of the relevant
decision.
(3) The report on economic activities of the company referred
to in Paragraph one, Clause 5 of this Section shall be prepared
in compliance with the requirements of legal acts for the
preparation of annual statements.
(4) The company need not prepare the report on economic
activities if all shareholders agree thereto or if the company
has, in accordance with the provisions of the Financial
Instrument Market Law, published an interim period statement for
a six-month period.
(5) If the company cannot, due to technical or other reasons,
ensure that shareholders have continuous electronic access to the
documents before taking the decision on reorganisation or if a
shareholder cannot access the electronically available documents
due to justified reasons, the company shall, upon request of the
shareholder, send the documents to the shareholder free of charge
or ensure other free access to the documents.
(6) If the company cannot, due to technical or other reasons,
ensure that shareholders have continuous electronic access to
documents within the period specified in Paragraph two of this
Section after taking of the decision on reorganisation, the
shareholders have the right to become acquainted with the
documents at the legal address of the company.
[11 May 2023]
Section 343. Decision on
Reorganisation
(1) The decision on reorganisation shall be taken by the
meeting of shareholders or members of each company involved in
the reorganisation process. The decision on reorganisation shall
approve the reorganisation agreement or draft agreement.
(2) A joint-stock company shall hold the meeting not earlier
than one month, but a limited liability company and a partnership
shall hold it not earlier than two weeks after the agreement or
draft agreement has been promulgated in accordance with Section
11 of this Law.
(3) If amendments are to be made to the articles of
association of a capital company or to the partnership agreement
in relation to the reorganisation, the decision thereon shall be
taken concurrently with the decision on reorganisation.
(4) At the meeting of shareholders of a capital company, the
executive board of the company must, upon request of
shareholders, provide explanations about the agreement or draft
agreement and the prospectus, about the legal and economic
consequences of the reorganisation, and also information about
other companies involved in the reorganisation process.
(5) The minutes of the meeting of shareholders shall indicate
the shareholders who have voted against the decision on
reorganisation at the meeting of shareholders.
[11 May 2023]
Section 344. Acquiring Company to Be
Newly Founded
(1) When founding a new company (acquiring company), the
regulations for the foundation of the respective type of company
must be followed.
(2) If the acquiring company is being founded through the
division of the company and no other already existing company is
involved in the reorganisation, the company to be divided shall
take the decision on division which shall substitute the
agreement referred to in Section 338 of this Law.
(3) If the acquiring company is a capital company, the
reorganisation agreement or the decision referred to in Paragraph
two of this Section shall, in addition to the information
referred to in Section 338, Paragraph two of this Law, indicate
the following information:
1) the amount of equity capital, the number and nominal value
of capital shares (stocks);
2) the given name, surname, and personal identity number of
the members of the executive board (if the person does not have a
personal identity number - the date of birth, the number and date
of issue of a personal identification document, the country and
authority which issued the document);
3) if the company has the supervisory board, the given name,
surname, and personal identity number of the members of the
supervisory board (if the person does not have a personal
identity number - the date of birth, the number and date of issue
of a personal identification document, the country and authority
which issued the document).
(4) The decision on reorganisation taken by the meeting of
shareholders shall be approved concurrently under the articles of
association or the partnership agreement of the acquiring company
(if the acquiring company is a partnership).
(5) The companies to be acquired shall submit to the
Commercial Register Office a joint application referred to in
Section 78 or 149 of this Law for the entry of the acquiring
company in the Commercial Register. The application shall be
accompanied by the decisions on reorganisation taken by the
companies to be acquired.
(6) The company to be divided shall submit to the Commercial
Register Office the reorganisation application together with the
application referred to in Section 78 or 149 of this Law for the
entry of the acquiring company in the Commercial Register.
[11 May 2023]
Section 345. Obligation to
Inform
The executive board of the company to be acquired or divided
has the obligation to inform the shareholders and the acquiring
company of all substantial changes in the status of the property
of the company to be acquired or divided which have occurred
before the expiry of the powers of the executive board or until
the moment when reorganisation comes into effect.
[11 May 2023]
Section 346. Contesting the Decision
on Reorganisation
(1) On the basis of a request of a shareholder or a member of
the executive board or supervisory board of a company involved in
reorganisation, a court may declare the decision on
reorganisation as void if it has been taken in violation of law,
the articles of association of a capital company or a partnership
agreement, and these violations cannot be eliminated or they are
not eliminated by within the term specified by the court.
(2) The term for bringing an action shall be one month from
the day of taking the decision on reorganisation.
(3) The company the decision on reorganisation taken by the
meeting of shareholders of which has been declared as void shall,
within 15 days from the day when the court ruling enters into
effect, submit a notice on contesting the reorganisation to the
Commercial Register Office. The notice shall be accompanied by
the relevant court ruling. The Commercial Register Office shall
publish the notice on contesting the reorganisation on its
website.
(4) The declaration of the decision on reorganisation as void
shall not impact the commitments which the company has assumed
during the reorganisation process towards third parties.
(5) The decision on reorganisation may not be contested only
due to the fact that:
1) a shareholder does not agree to the amount of capital share
(stock) exchange coefficient or premiums;
2) a shareholder does not agree to the amount of compensation
for shareholders;
3) information provided on the amount of the capital share
(stock) exchange coefficient or premiums, or the amount of
compensation for shareholders does not conform to the
requirements laid down in the law.
(6) A shareholder of the company to be acquired, divided, or
restructured who does not agree to the capital share (stock)
exchange coefficient and who, within the term specified in
Section 353, Paragraph three of this Law, has not requested the
company to repurchase its shares may, within one month after
expiry of the respective term, request a once only supplementary
payment from the acquiring company.
[11 May 2023 / See Paragraph 78 of Transitional
Provisions]
Section 347. Application to the
Commercial Register Office
(1) Each company involved in the reorganisation process shall,
not earlier than one month from the day of taking the decision on
reorganisation, submit to the Commercial Register Office an
application for making an entry on reorganisation in the
Commercial Register. The following shall be attached to the
application:
1) the agreement or its copy appropriately certified;
2) an extract from the minutes of the meeting of shareholders
with the decision on reorganisation;
3) in the cases specified in law, the reorganisation
permit;
4) the prospectus or certification that all shareholders have
agreed that no prospectus is prepared;
5) the opinion of the auditor or certification that all
shareholders have agreed that the auditor does not review the
reorganisation agreement or draft agreement;
6) the closing financial statement of the company to be
acquired or divided by way of splitting up;
7) the division of the register of shareholders (stockholders)
of the acquiring capital company.
(2) The company shall certify in the application that the
decision on reorganisation has not been contested before a court
or the relevant claim has not been satisfied.
(3) In order for an entry on reorganisation to be made in the
Commercial Register, the company shall indicate in the
application the names and registration numbers of all companies
involved in the reorganisation.
[11 May 2023 / Paragraph three, Clause 7 shall apply
from 1 July 2023. See Paragraphs 79 and 80 of Transitional
Provisions]
Section 348. Firm Name of the
Acquiring Company
(1) If there is only one acquiring company, it may use the
firm name of the company to be acquired after reorganisation.
(2) The provisions for the continued use of the firm name of
the company to be divided shall be stipulated in the
agreement.
(3) If a shareholder of the company to be acquired, divided,
or restructured has been a natural person who is not a
shareholder of the acquiring company, the acquiring company may
only use his or her name in the firm name with a written consent
of that person or the heirs thereof.
[11 May 2023]
Section 349. Entry on Reorganisation
in the Commercial Register
(1) An entry on the company to be acquired or divided in the
Commercial Register shall be made only after entries on all the
acquiring companies have been made.
(2) After making the entry on registration, the acquired
company shall be deleted from the Commercial Register.
(3) After making the entry on registration of the company to
be divided, relevant extracts from the file of the company to be
divided shall be attached to the files of the acquiring companies
and, in cases where the division is done by way of splitting up,
the company to be divided shall be deleted from the Commercial
Register.
(4) In the case of restructuring, the company shall be
considered as restructured after the entry on reorganisation has
been made.
[11 May 2023]
Section 350. Legal Meaning of the
Commercial Register Entry on Reorganisation
(1) Reorganisation shall be considered as being in effect from
the moment when entries have been made in the Commercial Register
on all the companies involved in the reorganisation process
including newly founded companies.
(2) From the moment when reorganisation comes into effect:
1) property of the company to be acquired shall be considered
as transferred into the ownership of the acquiring company;
2) property of the company to be divided shall be considered
as transferred into the ownership of the acquiring companies
according to the agreement.
(3) From the moment when the company is deleted from the
Commercial Register, such company shall be considered to be
liquidated.
(4) From the moment when reorganisation comes into effect, the
shareholders of the company to be acquired or divided shall
become shareholders of the acquiring company, and their capital
shares (stocks) shall be exchanged for the capital shares
(stocks) of the acquiring company in proportion to the capital
shares (stocks) owned by them. This provision shall not be
applied if the company to be divided which is divided by
divestiture becomes the sole shareholder of the acquiring
company.
(5) The rights of third parties to the capital shares (stocks)
of the company to be acquired, divided or restructured shall be
preserved in relation to the capital shares (stocks) of the
acquiring company.
(6) After reorganisation has come into effect, it may not be
contested.
[11 May 2023]
Section 351. Protection of
Creditors
(1) The application referred to in Section 347 of this Law
shall be accompanied by a notice to creditors in which they shall
be invited to submit their claims. The following shall be
indicated in the notice:
1) the firm names and registration numbers of the companies
involved in reorganisation;
2) the type of reorganisation;
3) the term for the submission of the claims of creditors
which may not be less than one month from the day when the notice
has been published.
(2) After the entry on reorganisation has been made in the
Commercial Register, the Commercial Register Office shall publish
on its website the notice to creditors referred to in Paragraph
one of this Section.
(3) The company shall, within three months after the
reorganisation comes into effect, secure the claim of such
creditor who had the right of claim against the company before
the decision on reorganisation was taken if the creditor has
submitted the claim within the specified term and has
demonstrated that the reorganisation threatens the satisfaction
of its claim. The security provided by the company shall be
proportionate, taking into account the financial situation of the
company and the interests of other creditors of the company.
(4) A secured creditor may request security only for the
amount of the unsecured part of the debt.
(5) A creditor has the right to bring an action to a court
regarding a security if the company has not secured the claim of
the creditor or the security provided is inadequate. The action
shall be brought within one month from the day when the company
has secured the claim of creditor or, if the company has not
provided the security, within one month after expiry of the term
referred to in Paragraph three of this Section.
[11 May 2023 / See Paragraph 78 of Transitional
Provisions]
Section 352. Liability of Members of
the Executive Board and Supervisory Board
(1) The members of the supervisory board and executive board
of the companies involved in the reorganisation and the
shareholders of partnerships who have representation rights shall
be jointly liable for any losses caused to the company, its
shareholders or creditors during the course of the reorganisation
through their fault.
(2) The limitation period for the claims referred to in
Paragraph one of this Section shall be five years from the moment
when the reorganisation comes into effect.
(3) If the acquiring company owns all shares (stocks) of the
company to be acquired, the members of the executive board and
supervisory board of the company to be acquired shall not be
responsible for the losses caused during the reorganisation
process to a shareholder of the company to be acquired.
[11 May 2023]
Section 353. Compensation
(1) A shareholder of the company to be acquired, divided, or
restructured who does not agree to the reorganisation is entitled
to request the acquiring company to buy back his or her shares in
the acquiring company for a fair and just compensation the amount
of which is specified in the reorganisation agreement.
(2) A shareholder who has voted against the reorganisation at
the meeting of shareholders and who has been recorded in the
minutes referred to in Section 343, Paragraph five of this Law
has the right to compensation.
(3) A shareholder is entitled to, within one month after
taking the decision on reorganisation, submit to the company a
written request for the buyback of shares.
(4) The company shall ensure that a shareholder can submit the
request referred to in Paragraph three of this Section through
electronic means of communication.
(5) The restrictions specified by law for the procedures by
which the company may acquire its own shares shall not be applied
to the compensation.
(6) The acquiring company shall disburse the compensation to a
shareholder within two months from the moment when the
reorganisation comes into effect, unless the reorganisation
agreement provides for a shorter term.
(7) The acquiring company shall pay statutory interest on any
compensation not disbursed in the specified amount and term.
(8) A shareholder who has requested the company to buy back
his or her shares is entitled to, within one month after
submission of the request, contest the amount of the compensation
and request the determination of a once only supplementary
payment.
[11 May 2023]
Division
XVII
SPECIAL PROVISIONS FOR PARTICULAR TYPES OF REORGANISATION
[11 May 2023]
Chapter 1
Special Provisions for Division
[11 May 2023]
Section 354. Division of
Property
(1) In addition to the information referred to in Section 338,
Paragraph two of this Law, the reorganisation agreement shall
indicate how the property of the company to be divided will be
divided between the acquiring companies. The deed on the division
of property may be appended to the agreement as an individual
document.
(2) In the case of splitting up, the property for which the
division is not specified in the reorganisation agreement shall
be divided between the acquiring companies in proportion to the
part of property which they have acquired from the company to be
divided according to the reorganisation agreement.
[11 May 2023]
Section 355. Protection of Creditors
in the Division
(1) The provisions of Section 351 of this Law for the
protection of creditors shall be applicable to division.
(2) All companies involved in the division, including the
newly founded companies, shall be jointly liable for the
commitments of the company to be divided which have arisen until
reorganisation comes into effect.
(3) In the mutual relations between jointly liable debtors,
only the person whose commitments are provided in the agreement
shall be deemed as the related subject. If the commitments of a
company involved in a division are not specified in the
agreement, it shall be jointly liable together with other
companies involved in the division for the commitments of the
company to be divided which have arisen until the moment when the
reorganisation comes into effect and which shall become due
within five years from the moment when the reorganisation comes
into effect.
[11 May 2023]
Chapter 2
Special Provisions for Restructuring
[11 May 2023]
Section 356. Decision on
Restructuring
(1) The company shall prepare a draft decision and prospectus
in writing.
(2) The decision on restructuring shall be taken by the
meeting of shareholders of the company to be restructured which
is convened in accordance with the procedures laid down in
Section 214 or 273 of this Law. The company shall, in accordance
with the procedures laid down in Section 342 of this Law, ensure
that shareholders have access to the reorganisation
documents.
(3) The decision shall substitute the reorganisation agreement
referred to in Section 338 of this Law. Section 338, Paragraph
four of this Law shall only be applicable if a partnership is
restructured into a capital company.
(4) The decision shall indicate the firm name, legal address,
and registration number of the company to be restructured and the
acquiring company, the type of the acquiring company, and the
information referred to in Section 338, Paragraph two, Clauses 2,
3, 4, 5, 7, 8, 9, 10, and 11 of this Law.
(5) The articles of association of the acquiring company or
partnership agreement of the acquiring company (if the acquiring
company is a partnership) shall be approved together with the
decision.
(6) Provisions for the foundation of the relevant type of
company shall be applicable during the restructuring process.
[11 May 2023]
Section 357. Executive Board and
Supervisory Board of the Acquiring Company
(1) If a partnership is being restructured into a capital
company, the executive board and supervisory board, if such is
required by law or articles of association, of the acquiring
company shall be elected concurrently with taking the decision on
reorganisation.
(2) If a capital company is being restructured into another
type of capital company, it shall be considered that members of
the executive board and supervisory board of the company to be
restructured have been elected as members of the executive board
and supervisory board of the acquiring company, unless otherwise
specified in the decision.
(3) If the acquiring company is a limited liability company,
it shall be considered that a member of the executive board or
supervisory board of the company to be restructured has been
elected in the acquiring company for an indefinite period, unless
otherwise specified in the articles of association of the
acquiring company or the decision on reorganisation.
(4) If the acquiring company is a joint-stock company and a
member of the executive board or supervisory board of the company
to be restructured has been elected for an indefinite period, his
or her powers in the acquiring company shall expire within the
term specified in law or articles of association, counting from
the moment when the reorganisation comes into effect.
[11 May 2023]
Section 358. Protection of Creditors
in Restructuring
The provisions of Section 351 of this Law for the protection
of creditors shall only be applicable if a partnership is being
restructured into a capital company.
[11 May 2023]
Section 359. Application to the
Commercial Register Office for the Registration of
Restructuring
(1) The company to be restructured shall, not earlier than one
month from the day of taking the decision on reorganisation,
submit to the Commercial Register Office an application for
making an entry on reorganisation in the Commercial Register.
(2) The following shall be appended to the application:
1) the decision on restructuring;
2) the documents referred to in Section 347, Paragraph first,
Clauses 3, 4, and 5 of this Law;
3) the articles of association of the acquiring company or
partnership agreement of the acquiring partnership.
(3) If a partnership is being restructured into a capital
company, in addition to the documents specified in Paragraph two
of this Section, the application shall be accompanied by the
following:
1) a written consent of each member of the executive board to
be a member of the executive board;
2) a written consent of each member of the supervisory board
to be a member of the supervisory board (if the acquiring company
has a supervisory board);
3) a statement or another document from the payment service
provider certifying payment of the equity capital (if the equity
capital or part thereof is paid in cash);
4) a document certifying the value of each property
contribution (if a property contribution is being made);
5) the division of the register of shareholders
(stockholders);
6) a certification issued by the central securities depository
on the recording of dematerialised stocks (if the acquiring
company is a joint-stock company).
(4) If a capital company is being restructured into another
type of capital company, in addition to the documents specified
in Paragraph two of this Section, the application shall be
accompanied by the following:
1) the document referred to in Paragraph three, Clauses 1 and
2 of this Section (if changes are made in the composition of the
executive board or supervisory board);
2) the document referred to in Paragraph three, Clauses 3 and
4 of this Section (if the equity capital of the acquiring company
is increased as a result of reorganisation);
3) the document referred to in Paragraph three, Clauses 5 and
6 of this Section.
(5) The company shall certify in the application that the
decision on reorganisation has not been contested before a court
or the relevant action has not been satisfied.
[11 May 2023 / Amendments to Clause 5 of Paragraph
three regarding the appending of the division of the register of
stockholders to the application and to Clause 6 of Paragraph
three regarding a certification issued by the central securities
depository on the recording of dematerialised stocks shall be
applicable from 1 July 2023. See Paragraph 79 of
Transitional Provisions]
Division
XVIII
SPECIAL PROVISIONS FOR THE REORGANISATION OF PARTICULAR TYPES OF
COMPANIES
[11 May 2023]
Chapter 1
Partnership as a Company Involved in Reorganisation
[11 May 2023]
Section 360. Contents of a
Reorganisation Agreement
If the acquiring company is a partnership, the reorganisation
agreement shall, in addition to the information referred to in
Section 338, Paragraph two of this Law, indicate the status of
each shareholder of the company to be acquired or divided in the
acquiring company (general or limited partner), and also the
amount of capital share thereof.
[11 May 2023]
Section 361. Partnership's Decision
on Reorganisation
(1) The decision on reorganisation shall be taken if all
members vote for it.
(2) It may be provided for in the partnership agreement that
the decision on reorganisation shall be taken if not less than
two thirds of the members vote for it.
[11 May 2023]
Section 362. Protection for Minority
Shareholders
If the acquiring company is a partnership, a shareholder of
the company involved in reorganisation who has voted against
reorganisation or has not participated in voting shall become a
limited partner of the acquiring company.
[11 May 2023]
Section 363. Liability of
Shareholders
(1) If the acquiring company is a limited partnership or a
capital company, the general partner of the company to be
acquired or divided shall be liable for such commitments of the
relevant company to be acquired or divided which have become due
or will become due within five years from the moment when the
reorganisation comes into effect.
(2) If the general partner of a company to be acquired or
divided becomes the general partner of the acquiring company, the
limitation period specified in Paragraph one shall not be
applied.
[11 May 2023]
Chapter 2
Capital Company as a Company Involved in the Reorganisation
[11 May 2023]
Section 364. Increase of the Equity
Capital of the Acquiring Company as a Result of the Merging or
Division Procedure
(1) If the equity capital of the acquiring company is being
increased as a result of the merging or division procedure, its
shareholders (stockholders) shall have no priority right to the
new shares provided for exchange.
(2) In addition to the documents specified in Section 202 or
261 of this Law which are to be submitted to the Commercial
Register Office in relation to an increase of the equity capital,
the application shall be accompanied by the decision on
reorganisation taken by the meeting of shareholders of each
company involved in the reorganisation.
[11 May 2023]
Section 365. Transfer of Shares
(Stocks) in the Case of Reorganisation
(1) The acquiring company shall, first of all, transfer for
exchange its own capital shares (stocks) to the shareholders of
the company to be acquired or divided.
(2) Capital shares (stocks) of the company to be acquired or
divided which have belonged to the acquiring company or to the
company to be acquired or divided, or to the person acting in his
or her name but respectively on behalf of the company to be
acquired or divided or the acquiring company shall not be
exchanged and shall be cancelled, except when, as a result of
divestiture, the company to be divided becomes the sole
shareholder of the acquiring company.
[11 May 2023]
Section 366. Valuation of Property
Contribution if the Acquiring Company is a Capital Company
(1) If the acquiring company is a company that, as a result of
reorganisation, has to increase its equity capital or is
established as a new company, valuation of the share of the
property of each company to be acquired or divided shall be
conducted in order to determine whether the property is
sufficient to increase the equity capital of the acquiring
company or to found it.
(2) The valuation shall be conducted in accordance with the
procedures laid down in Section 154 of this Law.
(3) The valuation may be conducted and an opinion thereon may
be provided by a person who has reviewed the reorganisation
agreement or draft agreement in the respective company.
(4) All shareholders of the relevant company and also
shareholders of the acquiring company have the right to become
acquainted with the opinion on the valuation of the property
contribution in accordance with the procedures laid down in
Section 342 of this Law.
(5) The opinion shall be appended to the application for
reorganisation which is to be submitted to the Commercial
Register Office.
[11 May 2023]
Section 367. Amount of Premiums
(1) The premiums provided for in the agreement which the
acquiring company disburses to the shareholders of the company to
be acquired, divided, or restructured may not in total exceed 10
per cent of the amount of the nominal value of the capital shares
(stocks) offered for exchange.
(2) In the case specified in Section 346, Paragraph six of
this Law, a once only supplementary payment may exceed the amount
specified in Paragraph one of this Section.
[11 May 2023]
Section 368. Rights of Stockholders
to Access Reorganisation Documents
(1) In addition to that specified in Section 342 of this Law,
a joint-stock company shall ensure a possibility for the
shareholders to become acquainted with reorganisation documents
at the legal address of the company and the right to receive
copies of or extracts from such documents free of charge.
(2) If a joint-stock company provides access to the
reorganisation documents free of charge on its website, it need
not ensure a possibility for the shareholders to become
acquainted with the relevant documents at the legal address of
the company.
(3) A joint-stock company does not have the obligation to
provide shareholders with a possibility to receive copies of the
reorganisation documents free of charge if the relevant documents
can be downloaded and printed from the company's website free of
charge not later than one month before the day when the decision
on reorganisation is planned to be taken.
[11 May 2023]
Section 369. Protection of Interests
of Holders of Preferred Stock and Debenture Holders
(1) The rights of the holders of preferred stock and debenture
holders of the joint-stock company to be acquired or divided
shall be preserved in the acquiring joint-stock company.
(2) If the acquiring company is not a joint-stock company, the
holders of preferred stock and debenture holders of the company
to be acquired, divided, or restructured shall participate in
determining the norm of representation and taking a decision on
reorganisation with the same rights as other stockholders. The
provisions of this Law for taking decisions in different
categories of stock shall apply thereto.
(3) The holders of preferred stock and debenture holders who
do not agree to the decision on reorganisation in the case
referred to in Paragraph two of this Section may request
compensation in accordance with the provisions of Section 353 of
this Law.
(4) If the acquiring company is not a joint-stock company, the
holders of preferred stock and debenture holders of the company
to be acquired, divided, or restructured shall acquire the shares
of the acquiring company based on the same provisions as other
stockholders of the company to be acquired, divided, or
restructured.
[11 May 2023]
Section 370. Restrictions on
Reorganisation
(1) A limited liability company which conforms to the signs
referred to in Section 185.1, Paragraph one of this
Law may not be reorganised.
(2) If the acquiring company is a limited liability company,
the equity capital thereof may not be less than that specified in
Section 185 of this Law.
[11 May 2023]
Division
XIX
SIMPLIFIED REORGANISATION PROCEDURES
[11 May 2023]
Section 371. Reorganisation
Documents
(1) If all capital shares (stocks) of the company to be
acquired belong to the acquiring company:
1) the information referred to in Section 338, Paragraph two,
Clauses 2, 3, 4, 5, 6, and 7 of this Law shall not be indicated
in the agreement;
2) the company to be acquired need not prepare the
prospectus;
3) the auditor need not review the agreement or draft
agreement in the company to be acquired.
(2) If all capital shares (stocks) of the company to be
acquired and the acquiring company belong directly or indirectly
to one shareholder, and, as a result of the reorganisation, the
acquiring company does not issue new capital shares (stocks),
Paragraph one of this Section shall be applied. In addition to
the abovementioned, in this case, the auditor need not review the
reorganisation agreement or draft agreement in the acquiring
company.
(3) If all capital shares (stocks) of the acquiring company
are acquired by the shareholders of the company to be divided,
the company to be divided need not prepare the prospectus, and
the auditor need not review the agreement or draft agreement in
the company to be divided.
(4) If a new company is founded through divestiture, and the
company to be divided becomes its sole shareholder:
1) the information referred to in Section 338, Paragraph two,
Clauses 2, 3, 4, 5, 6, and 7 of this Law shall not be indicated
in the agreement;
2) the company to be divided need not prepare the
prospectus;
3) the auditor need not review the agreement or draft
agreement in the company to be divided.
[11 May 2023]
Section 372. Decision on
Reorganisation in the Case of a Merger
(1) If the acquiring company owns at least 90 per cent of the
shares (stocks) of the company to be acquired, the meeting of
shareholders of the acquiring company need not take the decision
on reorganisation.
(2) In the case referred to in Paragraph one of this Section,
the acquiring joint-stock company shall submit to the Commercial
Register Office the application for the commencement of
reorganisation referred to in Section 338, Paragraph four of this
Law one month before the day of the planned meeting of
shareholders of the company to be acquired, whereas the acquiring
limited liability company shall submit it two weeks before the
planned day of the meeting, and they shall inform the
shareholders of the intention to enter into the reorganisation
agreement.
(3) The acquiring company shall, within the term specified in
Paragraph two of this Section, ensure that shareholders have
access to the documents specified in Section 342 of this Law.
(4) Shareholders of the acquiring company representing not
less than one twentieth of the equity capital of the company have
the right to request the convening of the meeting of shareholders
in order to take the decision on reorganisation.
(5) If the acquiring company owns all shares (stocks) of the
company to be acquired, the meeting of shareholders of the
company to be acquired need not take the decision on
reorganisation.
(6) If all capital shares (stocks) of the company to be
acquired and the acquiring company belong directly or indirectly
to one shareholder, and, as a result of the reorganisation, the
acquiring company does not issue new capital shares (stocks), the
meeting of shareholders of the company to be acquired need not
take the decision on reorganisation.
[11 May 2023]
Section 373. Decision on
Reorganisation in the Case of Division
(1) If the acquiring companies together own all shares
(stocks) of the company to be divided, the meeting of
shareholders of the company to be divided need not take the
decision on reorganisation.
(2) In the case referred to in Paragraph one of this Section,
the joint-stock company to be divided shall submit to the
Commercial Register Office the application for the commencement
of reorganisation referred to in Section 338, Paragraph four of
this Law one month before the day of the planned meeting of
shareholders of the acquiring company, whereas the limited
liability company to be divided shall submit it two weeks before
the planned day of the meeting, and they shall inform the
shareholders of the intention to enter into the reorganisation
agreement.
(3) The company to be divided shall, within the term specified
in Paragraph two of this Section, ensure that shareholders have
access to the documents specified in Section 342 of this Law.
[11 May 2023]
DIVISION
XIX1
CROSS-BORDER REORGANISATION
[11 May 2023]
Section 374. Concept of Cross-border
Reorganisation
(1) Cross-border reorganisation is a reorganisation involving
companies at least one of which is registered in Latvia, but
others - in accordance with laws and regulations of another
Member State.
(2) The provisions of this Law for reorganisation shall be
applicable to a cross-border reorganisation, except for Sections
356, 357, 358, and 359 of this Law, insofar as not otherwise
provided in this Division. If the acquiring company is registered
in another Member State, the company registered in Latvia shall,
when becoming involved in cross-border reorganisation, comply
with the provisions of this Law for the reorganisation of
companies which refer to the decision-taking process in relation
to reorganisation and to the protection of creditors,
shareholders, debenture holders, and also employees of the
company.
(3) Cross-border reorganisation may not be conducted by the
company:
1) which is under liquidation proceedings and for which the
division of property has been commenced;
2) whose activities have been terminated on the basis of a
decision of the Commercial Register Office or tax administration,
or a court ruling;
3) for which insolvency proceedings have been declared;
4) to which resolution tools are applied and against which
resolution powers and mechanisms are implemented in accordance
with the provisions of the Law on Recovery of Activities and
Resolution of Credit Institutions and Investment Firms;
5) which is subject to crisis prevention measures in
accordance with the Law on Recovery of Activities and Resolution
of Credit Institutions and Investment Firms;
6) which has intended to make collective contributions of the
capital of inhabitants in accordance with the principle of risk
spreading, and the capital shares (stocks) of which are, upon
request of shareholders, brought back or redeemed directly or
indirectly from the assets of this company. Activities through
which the company wishes to ensure that the market value of its
capital shares (stocks) would not significantly differ from the
net value of its assets shall be considered analogous to such
buyback or redemption.
[11 May 2023]
Section 375. Types of Cross-border
Reorganisation
(1) A company can be reorganised by way of cross-border
merger, division, or restructuring.
(2) Cross-border merger is a process in which one or more
companies registered in a Member State (companies to be acquired)
transfer all their property to a company registered in another
Member State (acquiring company) by way of acquisition or
consolidation.
(3) Cross-border division is a process in which a company
registered in a Member State (company to be divided) transfers
its property to one or more companies registered in other Member
States (acquiring companies) by way of splitting up or
divestiture.
(4) Cross-border restructuring is a process in which the
company to be restructured changes its type of company to a type
of company existing in another Member State and transfers its
legal address to that Member State, while maintaining its status
of the holder of rights.
[11 May 2023]
Section 376. Cross-border
Reorganisation Agreement
In addition to the information referred to in Section 338,
Paragraph two of this Law, the cross-border reorganisation
agreement (hereinafter - the agreement) shall indicate the
following:
1) the type of the companies involved in cross-border
reorganisation and of the newly founded company (if any);
2) information that the capital companies involved in
cross-border reorganisation have rules for the participation of
employees in effect, if such are applicable;
3) information on the means of security available to
creditors;
4) in the case of cross-border merger or division, information
on the valuation of the assets and liabilities included in the
property to be transferred to the acquiring company;
5) the date of approval of the report on economic activities
of the company on which the provisions for cross-border merger or
division are based;
6) information on whether the company to be restructured has
received State aid or subsidies within five years before taking
the decision on reorganisation.
[11 May 2023]
Section 377. View of Shareholders,
Creditors, and Employees on the Agreement or Draft Agreement
(1) The application referred to in Section 338, Paragraph four
of this Law shall be accompanied by a notice to shareholders,
creditors, and representatives of employees (if there are no
representatives, then employees) in which they shall be invited
to express their views on the agreement or draft agreement. The
notice shall indicate the place and time for providing the view
which cannot be later than five working days before the day when
the meeting of shareholders is planned to be held for taking the
decision on reorganisation.
(2) The Commercial Register Office shall publish on its
website the notice referred to in Paragraph one of this
Section.
(3) If the company receives the view of shareholders,
creditors, or representatives of employees (if there are no
representatives, then employees), the executive board shall
immediately inform the shareholders of that and ensure that the
shareholders have access to the view in accordance with the
procedures laid down in Section 342 of this Law.
[11 May 2023]
Section 378. Cross-border
Prospectus
(1) A cross-border prospectus shall indicate and explain the
information referred to in Section 339, Paragraph one of this
Law, and also the impact of the cross-border reorganisation on
employees. The prospectus shall contain a section for
shareholders and a section for employees.
(2) The section for shareholders shall indicate and explain
the information referred to in Section 339, Paragraph two of this
Law, the impact of reorganisation on shareholders, and the right
of a shareholder to compensation in accordance with Section 535
of this Law.
(3) If the agreement or draft agreement is reviewed by a sworn
auditor, the section for shareholders shall indicate the market
value of the capital shares (stocks) of the companies involved in
reorganisation which has been determined not later than six
months before the promulgation of the agreement or draft
agreement, or the value of the respective companies which has
been determined according to generally accepted valuation
methods, without taking into account the consequences of
reorganisation.
(4) The section for shareholders need not be prepared if all
shareholders agree thereto.
(5) The section for employees shall indicate and explain the
following:
1) the impact of reorganisation on employment relationship and
measures for the protection of employment relationship;
2) all significant changes in the employment conditions,
including changes in the legal address of the company and the
address of the work performance place;
3) how the information specified in Clauses 1 and 2 of this
Paragraph affects the dependent companies of the company (if
any).
(6) The section for employees need not be prepared if the
company and dependent companies thereof do not have
employees.
(7) The company can prepare a joint prospectus, including a
section for shareholders and a section for employees, or a
separate prospectus for shareholders and employees.
(8) The company need not prepare the prospectus if, in
accordance with the provisions of this Section, neither the
section for shareholders nor the section for employees has to be
prepared.
[11 May 2023]
Section 379. Employees' View on
Prospectus
(1) Representatives of employees (if there are no
representatives, then employees) are entitled to provide the
company with a written view on the information which is included
in the prospectus and concerns employees no later than two weeks
before the day the meeting of shareholders is planned to be held
for taking the decision on reorganisation.
(2) If the company receives the view of the representatives of
employees (if there are no representatives, then employees), the
executive board shall immediately inform the shareholders thereof
and ensure that the shareholders have access to the view in
accordance with the procedures laid down in Section 342 of this
Law.
[11 May 2023]
Section 380. Opinion of the Auditor
in the Case of Cross-border Reorganisation
When preparing the opinion referred to in Section 341,
Paragraph two of this Law, the auditor shall take into account
the information referred to in Section 378, Paragraph three of
this Law.
[11 May 2023]
Section 381. Access to Cross-border
Reorganisation Documents
(1) The company shall, in accordance with the procedures laid
down in Section 342 of this Law, ensure that shareholders have
access to reorganisation documents. Shareholders must have access
to the documents referred to in Section 342, Paragraph one,
Clauses 1, 3, 4, and 5 of this Law not later than one months
before the day the meeting of shareholders is planned to be held
for taking the decision on reorganisation, but to the prospectus
- not later than six weeks before the day when the meeting of
shareholders is planned to be held for taking the decision on
reorganisation.
(2) The company shall ensure that representatives of employees
(if there are no representatives, then employees) have continuous
and free electronic access (including a possibility to save and
print) to the prospectus not later than six weeks before the day
when the meeting of shareholders is planned to be held for taking
the decision on reorganisation, and not later than until the day
when reorganisation comes into effect. The prospectus shall be
accompanied by the agreement or draft agreement when it has been
prepared but not later than one month before the day of the
planned meeting of shareholders.
[11 May 2023]
Section 382. Protection of Creditors
in the Case of Cross-border Reorganisation
(1) The application referred to in Section 338, Paragraph four
of this Law shall be accompanied by a notice to creditors in
which they shall be invited to submit their claims. The notice to
creditors shall indicate:
1) the firm names and registration numbers of the companies
involved in reorganisation;
2) the type of reorganisation;
3) the term for the submission of the claims of creditors
which may not be less than two months from the day when the
notice has been published.
(2) The Commercial Register Office shall publish on its
website the notice to creditors referred to in Paragraph one of
this Section.
(3) The company shall, within one month after expiry of the
term for the submission of the claims of creditors, secure the
claim of such creditor who had the right of claim against the
company before the decision on reorganisation was taken if the
creditor has submitted the claim within the specified term and
has demonstrated that the reorganisation threatens the
satisfaction of its claim. The security provided by the company
shall be proportionate, taking into account the financial
situation of the company and the interests of other creditors of
the company.
(4) A secured creditor may request security only for the
amount of the unsecured part of the debt.
(5) A creditor has the right to bring an action to a court
regarding a security if the company has not secured the claim of
the creditor or the security provided is inadequate. The action
shall be brought within one month from the day when the company
has secured the claim of creditor or, if the company has not
provided the security, within one month after expiry of the term
referred to in Paragraph three of this Section.
(6) Contestation of the security in accordance with Paragraph
five of this Section shall not constitute a legal obstacle to
making an entry on reorganisation in the Commercial Register.
(7) In addition to the protection of creditors provided for in
this Section, the provisions of Section 355 of this Law shall be
applicable to cross-border division. If the company conducts
cross-border division by way of divestiture, its liability in the
case referred to in Section 355, Paragraph two of this Law shall
not exceed the amount of the property transferred thereto as a
result of the reorganisation.
[11 May 2023 / See Paragraph 78 of Transitional
Provisions]
Section 383. Participation of
Employees
If the acquiring capital company is registered or intended to
be registered in Latvia, and at least one of the capital
companies involved in the cross-border reorganisation has rules
for the participation of employees in effect, then laws and
regulations governing the participation of employee in taking
decisions in the case of cross-border reorganisation of capital
companies shall be applied to the participation of employees.
[11 May 2023]
Section 384. Application of a
Company Registered in Latvia for the Registration of Cross-border
Reorganisation
(1) Each company registered in Latvia and involved in
cross-border reorganisation shall, not earlier than two months
from the day of taking the decision on reorganisation, submit to
the Commercial Register Office an application for making an entry
on cross-border reorganisation in the Commercial Register.
(2) The application shall include the firm names and
registration numbers of all companies involved in the
reorganisation, and for a company of another Member State, also
the type of company and the Commercial Register Office with which
it is registered.
(3) The following shall be appended to the application:
1) the documents referred to in Section 347, Paragraphs one of
this Law;
2) the view of shareholders, creditors, or representatives of
employees (if there are no representatives, then employees)
referred to in Section 377 of this Law on the agreement or draft
agreement (if any);
3) the view of representatives of employees (if there are no
representatives, then employees) referred to in Section 379 of
this Law on the prospectus (if any).
(4) The company shall certify the following in the
application:
1) the claims of the creditors who have submitted their claims
within the specified term have been secured or satisfied;
2) the decision on reorganisation has not been contested
before a court or the relevant claim has not been satisfied;
3) the division of the property of the company has not been
commenced (if the company is under liquidation proceedings).
(5) The application shall indicate whether the company, in
accordance with Section 383 of this Law or legal acts of another
Member State, must respect the participation of employees and
shall certify that it is secured or negotiations have been
commenced for the involvement of employees (representatives
thereof) in taking decisions.
[11 May 2023]
Section 385. Application of a
Company Registered in Another Member State for the Registration
of Cross-border Reorganisation
(1) If the acquiring company is registered or intended to be
registered in Latvia, the company to be acquired, divided, or
restructured which has been registered in another Member State
and is involved in the cross-border registration process shall
submit to the Commercial Register Office an application for
making an entry on cross-border registration in the Commercial
Register.
(2) The application shall include the firm names and
registration numbers of all companies involved in the
reorganisation, and for a company of another Member State, also
the type of company and the Commercial Register Office with which
it is registered.
(3) The application shall be accompanied by the reorganisation
agreement.
(4) The application shall indicate whether the company, in
accordance with legal acts of the Member State in which the
company is registered, must respect the participation of
employees and shall certify that it is secured or negotiations
have been commenced for the involvement of employees
(representatives thereof) in taking decisions.
[11 May 2023]
Section 386. Application for
Entering the Acquiring Company in the Commercial Register
If it is intended to register the acquiring company in Latvia,
the company involved in cross-border reorganisation shall, in
addition to the application referred to in Section 385 of this
Law, submit the application referred to in Section 78 or 149 of
this Law for entering the acquiring company in the Commercial
Register. The companies to be acquired shall submit to the
Commercial Register Office a joint application for entering the
acquiring company in the Commercial Register.
[11 May 2023]
Section 387. Pre-reorganisation
Certificate and Entry on Cross-border Reorganisation
(1) If the acquiring company is registered or intended to be
registered in another Member State, a pre-reorganisation
certificate which certifies that the company registered in Latvia
has taken all necessary actions for the completion of
cross-border reorganisation shall be issued to the company to be
acquired, divided, or restructured which is registered in
Latvia.
(2) If the acquiring company is registered or intended to be
registered in another Member State, the entry on the
reorganisation of the company to be acquired, divided, or
restructured shall be made in the Commercial Register when the
Commercial Register Office has received information from the
Commercial Register Office of another Member State in the system
of interconnection of registers about making the entry on
registration.
(3) After making the entry on reorganisation referred to in
Paragraph two of this Section in the Commercial Register, the
company to be acquired, divided (if the cross-border division
occurs through divestiture), or restructured shall be deleted
from the Commercial Register.
(4) If the acquiring company is registered or intended to be
registered in Latvia, the entry on the reorganisation of the
acquiring company or the entry of the acquiring company in the
Commercial Register shall be made on the basis of applications of
the companies involved in the cross-border reorganisation process
and the pre-reorganisation certificate received from the
Commercial Register Office of another Member State in the system
of interconnection of registers.
[11 May 2023]
Section 387.1 Entry into
Force of Cross-border Reorganisation
(1) If the acquiring company is being registered in Latvia,
cross-border merger or restructuring shall be deemed to be into
force when an entry on the acquiring company is made in the
Commercial Register.
(2) If the acquiring company is registered or is being
registered in Latvia, the entry into force of cross-border
division shall be governed by legal acts of the Member State in
which the company to be divided is registered.
(3) If the acquiring company in cross-border merger or
restructuring is being registered in another Member State, the
entry into force of the cross-border merger or restructuring
shall be governed by legal acts of the respective Member
State.
(4) If the company to be divided is registered in Latvia,
cross-border division shall be deemed to be into force from the
moment when an entry on reorganisation of the company to be
divided is made in the Commercial Register.
(5) On the basis of the notice received from the Commercial
Register Office of a Member State in the system of
interconnection of registers, the Commercial Register Office
shall register information on the entry into force of
reorganisation if, in accordance with this Section, the entry
into force of the reorganisation is governed by legal acts of
another Member State.
[11 May 2023]
Section 387.2
Jurisdiction of Disputes Related to the Rights of Shareholders to
Compensation
Disputes related to the rights of shareholders specified in
Section 353 of this Law to compensation shall be settled before a
Latvian court in accordance with the provisions of the Civil
Procedure Law for jurisdiction.
[11 May 2023]
Part D
COMMERCIAL TRANSACTIONS
[18 December 2008]
Paragraph shall come into force on 1 January 2010. See
Transitional Provisions]
Division
XX
GENERAL PROVISIONS FOR COMMERCIAL TRANSACTIONS
Section 388. Definition of
Commercial Transactions
Commercial transactions are lawful transactions of a merchant
which are connected with commercial activities.
Section 389. Commercial Transaction
where One Party is a Merchant
If a transaction is a commercial transaction only for one of
the parties to the transaction, the provisions of this Law for
commercial transactions shall be equally applicable also to other
parties to the transaction, insofar as it is not otherwise
provided for in laws and regulations in the field of protection
of consumer rights or in other laws.
Section 390. Presumption of
Commercial Transaction
(1) In case of doubts, a transaction of a sole proprietorship
shall be deemed a commercial transaction. Within the meaning of
this Section, making a record in accounting, input tax deduction,
use of the benefits obtained as a result of the transaction in
commercial activities, and the like shall be deemed as the
attribution of the transaction to commercial activities.
(2) A debt document signed by a sole proprietorship shall be
deemed signed in relation to the commercial activities performed
thereby, insofar as the contrary does not arise from this
document.
Section 391. Commercial
Practices
In interpreting the intent expressed by a merchant, as well as
the meaning and consequences of its actions, the practices
existing within the scope of commercial rights in the relevant
sector shall be taken into account in the mutual legal relations
of merchants.
Section 392. Merchant's Silence
(1) If a merchant (commercial agent, broker, commission agent,
forwarder, etc.) who enters into transactions in favour of other
persons or prepares entry therein is expressed a proposal for
entry into such transaction or preparation of such entry by a
person with whom he or she has relations of commercial
transactions, the merchant has the obligation to reply to this
proposal as soon as possible.
(2) Also if the merchant refuses the proposal on the entry
into a transaction or preparation of entry therein, he or she has
the obligation to ensure temporary storage of such movable
property which was sent together with the proposal at expense of
the person who expressed the proposal, insofar as it is not
connected with incommensurate expenses and insofar as the
coverage of the storage expenses of the movable property is
ensured for the merchant.
Section 393. Obligation of Diligence
of the Merchant
(1) In relations of commercial transactions, a merchant has
the obligation to act with the diligence of a respectable and
accurate merchant.
(2) The condition of Paragraph one of this Section shall not
limit the application of such provisions of the Law where the
liability of a debtor for evil intent, gross negligence or lack
of such diligence which he or she is used to exercise in his or
her own dealings is regulated.
Section 394. Joint Liability
If several merchants jointly undertake to fulfil a divisible
commitment, they shall be jointly liable for this commitment in
case of doubts.
Section 395. Consideration and
Calculation of Interest
(1) A merchant who enters into transactions in favour of
another person or prepares the entering into them, or provides
services is entitled to request consideration even if it has not
been agreed upon. The amount of the consideration shall be
determined according to the amount of consideration usually paid
in the relevant geographical territory.
(2) The merchant referred to in Paragraph one of this Section
is entitled to calculate lawful interest for loans, pre-payments,
expenditures and other payments, counting from the day of making
the relevant payment.
Section 396. Fulfilment Period
The fulfilment of commitments in commercial transactions may
be requested and commitments may be fulfilled only during the
usual working hours of a merchant, unless it arises otherwise
from the conditions of the matter.
Section 397. Medium Benefit
Property
If the subject-matter of a commitment of a merchant is such
movable property which is characterised by grade and amount,
medium benefit properties shall be given for the fulfilment of
the commitment, unless the parties to the transaction have agreed
otherwise. A medium benefit property shall mean a property which
has been recognised as such within the scope of commercial rights
at the place where the commitment is fulfilled.
Section 398. Units of Measurement
and Currency
In case of doubts, it shall be considered that the parties to
a commercial transaction have agreed on such units of measurement
of length, area, volume, mass and other units of measurement, and
also on the currency which exists at the place where the relevant
commitment is fulfilled.
Section 399. Right to Retainer
(1) A merchant is entitled to retain movable properties and
securities owned by another merchant and possessed by him or her
which have come in the possession of the retainer under a
commercial transaction in accordance with the will of the other
merchant, and not to release these properties and securities as
long as the monetary claim of the retainer against another
merchant arising from the commercial transaction entered into
between them is not satisfied. In order to achieve the
satisfaction of such claim, the merchant may retain also such
objects which he or she has obtained in the ownership from
another merchant or a third party, however, in favour of the
other merchant, and which the retainer has an obligation to
transfer in the ownership of the other merchant.
(2) The right to retainer may only be exercised if the
commitment of the other merchant can already be fulfilled and is
not limited either by a condition or time limit.
(3) The right to retainer shall not be effective against the
third party who has obtained the right of commercial pledge to
the retained object. In such case, the provisions of Section 40
of the Commercial Pledge Law shall be applicable accordingly.
Also the right to retainer shall not be effective against the
third party who has lawfully obtained some other right in rem to
the retained object prior to exercising the right of
retainer.
(4) A merchant is not entitled to retain objects with which he
or she has an obligation to act in a specific way on the basis of
a commitment which the merchant has undertaken towards another
merchant.
(5) The other merchant may prevent the exercise of the right
to retainer by providing suitable collateral. The collateral may
not be the guarantee of a third party, except when the retainer
agrees to receive such collateral. The retainer shall obtain the
pledge rights to properties received as collateral in accordance
with the provisions of the law regarding the establishment of
pledge rights.
Section 400. Right of Retainer to
Satisfy the Claim
(1) A retainer is entitled to satisfy his or her claim against
another merchant by selling the retained objects at an auction
with the intermediation of a court, unless they have specifically
agreed that the retainer has the right to sell the retained
objects for a free price. The provisions of the Civil Law for the
right of possessory pledge shall be applicable accordingly to the
satisfaction of the retainer's claim.
(2) A retainer has the superior right to satisfy his or her
claim against other persons that are not referred to in Section
399, Paragraph three of this Law and in favour of whom the
retained objects have been pledged after the exercise of the
right to retainer by selling the retained objects.
Section 401. Obtaining of Movable
Properties into Ownership in Good Faith
(1) Even if a merchant alienates a property that is not own
thereby in favour of another person on the basis of a commercial
transaction, the acquirer shall obtain the property rights to
this property, except when he or she was not acting in good faith
at the time of transfer. The acquirer is not acting in good faith
if he or she knows that the property is not owned by the alienor
or the alienor is not entitled to handle this property, or the
acquirer is not aware thereof due to gross negligence.
(2) If the alienated property is burdened by rights of a third
party, these rights shall expire with the transfer of the
property rights to the acquirer of good faith, except when he or
she at the time of the transfer has been aware of such rights or
had not been aware due to gross negligence.
(3) The provisions of this Section do not apply to a property
obtained in illegal way, lost property or such property the
possession of which has been terminated against the will of the
owner, except for money, bearer securities, and also the
properties which have been sold at an auction with the
intermediation of a court.
Section 402. Legal Right of
Possessory Pledge
(1) The provisions of the Civil Law for the right of
possessory pledge shall be applied accordingly to the merchant's
legal right of possessory pledge, insofar as this Section does
not specify otherwise.
(2) A pledgee whose claim has not been satisfied by the debtor
within the specified period is entitled to, by notifying the
debtor thereof in advance and complying with the provisions of
the Civil Law for the sale at an auction, sell the object of the
legal right of possessory pledge at the debtor's expense and
through a sworn bailiff at a voluntary public auction. The
relevant provisions of the Civil Procedure Law for the auctioning
of a movable property shall be applied to the announcement and
procedures of the auction.
(3) The lawful subject-matter of the right of possessory
pledge shall be sold for the highest price which is possible
during the sale and the sale shall not be deferred.
(4) A pledgee shall be liable towards the debtor as an
authorised representative for the sale of the subject-matter of
the right of possessory pledge and his or her obligation shall be
to compensate all losses of the debtor which the pledgee could
have prevented by exercising diligence of a respectable and
accurate merchant.
Section 403. Bill of Lading,
Consignment Note, and Warehouse Receipt as Order Instruments
(1) Bill of lading, consignment note, and warehouse receipt
may be transferred further with an endorsement if it is directly
indicated in the relevant document (hereinafter within the
framework of this Division - the order instrument).
(2) An endorsement shall transfer all the rights arising from
the endorsed order instrument to the endorsee.
(3) A debtor may raise only such objections against the
legitimised holder of the order instrument which refer to the
validity of the expression of will of the debtor included in the
order instrument and arise from the content of the order
instrument, or also objections which the debtor has against the
legitimised holder of the order instrument himself or
herself.
(4) A debtor shall be obliged to fulfil his or her commitment
only upon receipt of the order instrument with a receipt for
fulfilment issued by the legitimised holder of the order
instrument. If the commitment is fulfilled partly, a relevant
note shall be made on the order instrument thereon and a receipt
for partial fulfilment shall be issued to the debtor.
Section 404. Endorsement Form and
Blank Endorsement
(1) An endorsement shall be written on the order instrument or
a sheet attached thereto. An endorsement shall be signed by the
endorser.
(2) The endorsee need not be indicated in the endorsement and
the endorsement may be expressed only in the signature of the
endorser (blank endorsement). In the latter case, endorsement
shall be written on the other side of the order instrument or a
sheet attached thereto in order for it to be valid.
(3) If a blank endorsement is made, the holder of the order
instrument may:
1) fill in the endorsement in his or her own or other person's
name;
2) endorse the order instrument further with a blank
endorsement or in the name of another person;
3) transfer the order instrument further without filling in
the blank endorsement and making a new endorsement.
Section 405. Legitimation of the
Holder of the Order Instrument
(1) The person who has obtained the order instrument it
holding shall be recognised as the legitimized holder thereof
insofar as he or she proves his or her rights with a continued
row of endorsements, also if the last endorsement is a blank
endorsement. In this respect, the deleted endorsements shall be
considered as not entered. If any other endorsement follows a
blank endorsement, it shall be presumed that the signatory of
this last endorsement has obtained the order instrument on the
basis of the blank endorsement.
(2) If the order instrument is lost by the former holder
thereof, the new holder who proves his or her rights in
accordance with the provisions of Paragraph one of this Section
has the obligation to return the order instrument only if he or
she has obtained it in bad faith or by admitting gross
negligence.
(3) A debtor has an obligation to check whether the row of
endorsements entered in the order instrument is continuous,
however, he or she is not obliged to verify the genuineness of
endorsement signatures.
Section 406. Limitation Period
The limitation period for claims arising from a commercial
transaction shall expire within three years, unless other
limitation period is specified by the law.
Division
XXI
SPECIAL PROVISIONS FOR CERTAIN COMMERCIAL TRANSACTIONS
Chapter 1
Commercial Purchase Agreement
Section 407. Definition of
Commercial Purchase Agreement
(1) Commercial purchase agreement (hereinafter within the
framework of this Chapter - the purchase agreement) shall be such
agreement by which the seller undertakes to sell and the buyer
undertakes to buy goods and pay the agreed purchase price and in
which at least one of the contracting parties is a merchant.
Goods within the meaning of this Chapter shall be movable
property intended for sale which has not been withdrawn from
circulation in the private sector.
(2) The provisions of this Chapter shall be applicable also to
the purchase of securities.
[15 April 2010]
Section 408. Delay of Purchaser
(1) If a purchaser does not accept goods in case of a delay, a
seller is entitled to take the following actions by notifying the
purchaser thereof in advance:
1) to transfer the goods for storage in a warehouse or in
another safe place for reasonable remuneration at the purchaser's
expense and risk;
2) to sell the goods for a free price which is not less than
the agreed purchase price;
3) to sell the goods at the purchaser's expense and through a
sworn bailiff at a voluntary public auction in compliance with
the provisions of the Civil Law for the sale at an auction and
announcement of an auction and by applying the relevant
provisions of the Civil Procedure Law for the auctioning of a
movable property to the announcement and procedures of the
auction.
(2) The seller is entitled to sell perishable goods or goods
which are subjected to other risk for a free price without an
auction and without notifying the purchaser thereof in
advance.
(3) If the goods referred to in Paragraph one, Clause 3 or
Paragraph two of this Section are sold for a price lower than has
been agreed in the purchase agreement, the purchaser has the
obligation to pay the difference between the agreed price and the
sales price of the goods.
(4) If the goods are sold in a voluntary public auction with
intermediation of a sworn bailiff, a seller has the obligation to
notify a purchaser of the time and place of the auction within
reasonable period before the auction, moreover, the purchaser is
entitled to participate in bidding. The seller has the obligation
to notify the purchaser of the sale without delay. If the seller
fails to fulfil the abovementioned obligation, he or she shall be
liable for the losses caused to the purchaser.
(5) The provisions of this Section shall not limit the rights
of a seller which he or she may exercise in accordance with the
Civil Law if a purchaser admits a delay.
[15 April 2010]
Section 409. Purchase with
Specification
(1) If pursuant to a purchase agreement a purchaser is
entitled to specify more detailed form, size, quality, sort of
goods or other features of goods, the purchaser has an obligation
to specify them within the agreed time limit or as soon as
possible after receipt of the request from the seller.
(2) If a purchaser admits delay in relation to specification
of features of goods, the seller is entitled to specify the
relevant features instead of the purchaser or to unilaterally
withdraw from the agreement or request a compensation for losses
which have been caused to him or her due to the delay of the
purchaser.
(3) If a seller himself or herself specifies the features of
goods instead of the purchaser, he or she has the obligation to
notify the purchaser of this specification and determine a
reasonable time limit during which the purchaser may specify
other specification. If the purchaser fails to provide other
specification to the seller within the specified time limit, the
specification specified by the seller shall be binding to the
purchaser.
Section 410. Term Purchase
(1) Term purchase is such purchase agreement by which at least
one of the contracting parties has undertaken to fulfil his or
her obligation precisely on a certain day or within a certain
period and pursuant to decisively expressed will of the
contracting parties the agreed time of performance is a
substantial part of such agreement.
(2) If the contracting party referred to in Paragraph one of
this Section fails to fulfil his or her commitment on the agreed
day or within the agreed period, the other contracting party is
entitled to unilaterally withdraw from the agreement and also to
request a compensation for the losses caused to the other
contracting party due to the delay of the debtor in relation to
the non-fulfilment of the agreement. The other contracting party
may request the debtor to fulfil the commitment only if he or she
immediately after expiration of the time limit notifies the
debtor of his or her wish for the fulfilment of the
obligation.
(3) [15 April 2010]
[15 April 2010]
Section 411. Obligation of Purchaser
to Check the Goods and Notify of Deficiencies
(1) A purchaser has the obligation to check the goods as soon
as possible after receipt thereof. When establishing deficiencies
of goods, the purchaser has the obligation to notify the seller
of them without delay, indicating their type and scale.
(2) If a purchaser fails to notify the seller of the
deficiencies of the received goods in accordance with the
provisions of Paragraph one of this Section, it shall be
considered that the purchaser has accepted the goods and he or
she loses the right provided for in Section 1620, Paragraph two
of the Civil Law to request the cancellation of the purchase
agreement or a reduction of the price for the goods, except when
the goods have hidden deficiencies which could not have been
established when checking the goods.
(3) If the hidden deficiencies of goods are found later, the
purchaser has the obligation to notify the seller of such
deficiencies immediately after their finding. If the purchaser
fails to notify the seller of the deficiencies of the received
goods, it shall be considered that the purchaser has accepted the
goods with these hidden deficiencies.
(4) The provisions of this Section shall not be applicable if
the seller has concealed or hidden the deficiencies of the goods
in bad faith or convincingly asserted that the goods have certain
properties.
(5) The provisions of this Section shall be applicable if the
purchaser and seller are merchants.
Section 412. Temporary Storage of
Goods
(1) If a purchaser has notified a seller of deficiencies of
such goods which have been delivered to the purchaser from
another place, the purchaser has the obligation to ensure
temporary storage of such goods.
(2) A purchaser is entitled to sell perishable goods or goods
which are subject to other risks or the storage of which is
related to disproportionate costs in compliance with the
provisions of Section 408, Paragraphs two and three of this
Law.
(3) The provisions of this Section shall be applicable if the
purchaser and seller are merchants.
Section 413. Mass of the Packaging
of Goods
(1) If the purchase price is determined pursuant to the mass
of goods, the mass of the packaging of goods shall not be taken
into account if it does not arise otherwise from the agreement or
the commercial usage of the place where a seller is bound to
fulfil his or her obligation.
(2) Within the meaning of this Law, the term "packaging" shall
also mean a container used for inland, water, and air
transport.
Section 414. Application of
Provisions of the Purchase Agreement to Barter, Supply and
Work-performance Contract
(1) The provisions of this Chapter shall be also applicable
accordingly to such barter and supply contract (Sections 2092 and
2109 of the Civil Law) the subject matter of which is the
goods.
(2) The provisions of this Chapter shall be applicable to a
work-performance contract for the production of movable property
from the material provided by the entrepreneur (Section 2214,
Paragraph one of the Civil Law).
Chapter 2
Commercial Commission Contract
Section 415. Definition of
Commercial Commission Contract and Commission Agent
(1) Commercial commission contract is such contract by which a
merchant (commission agent) undertakes to purchase or sell goods
or securities or enter into other types of transactions with
third parties in his or her name, however, at another person's
(committent's) expense, but the committent undertakes to pay the
agreed commission.
(2) A commission agent is such agent who has undertaken to
independently enter into transactions with other persons in his
or her name, however, at the committent's expense. The provisions
of Sections 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58,
59, 60, and 61 of this Law shall be applicable accordingly to
mutual relations between the commission agent and the
committent.
Section 416. Obligations of
Commission Agent
(1) A commission agent has the obligation to fulfil the
commission with the diligence of a respectable and accurate
merchant. The commission agent, in particular, has the obligation
to respect the interests of the committent and follow his or her
instructions.
(2) A commission agent shall transfer all the necessary
information and documents to the committent. The commission
agent, in particular, has the obligation to notify the committent
of the fulfilment of the commission without delay.
(3) A commission agent has the obligation to provide the
committent with a settlement of accounts for each transaction
entered into, and also to transfer to the committent what the
commission agent has acquired in fulfilling his or her
obligations.
(4) A commission agent shall be liable towards the committent
for the execution of a transaction if he or she, concurrently
with a notice on the fulfilment of the commission, has not
indicated to the committent the third party with whom this
transaction has been entered into.
Section 417. Instructions of the
Committent
(1) If a commission agent fails to act pursuant to the
instructions of a committent, he or she shall be liable for the
losses caused to the committent, moreover, the committent has no
obligation to recognise the transaction as entered into at his or
her expense.
(2) The commission agent is entitled to derogate from
instructions of the committent only if he or she has a reason to
consider that in the particular case, knowing the circumstances
of the matter, the committent himself or herself would have acted
the same. In such case, the commission agent has the obligation
to notify the committent of his or her derogation from
instructions without delay and wait for the decision of the
committent, unless there is a risk of delay.
Section 418. Price Limits
(1) If a commission agent violates the price limits specified
by the committent when entering into a transaction with a third
party and the committent does not want to acknowledge that the
relevant transaction has been entered into at his or her expense,
the committent has the obligation to notify the commission agent
thereof without delay, as soon as a notice on the fulfilment of
the commission is received. Otherwise it shall be considered that
the committent has agreed to the deviation from the price limit
allowed by the commission agent.
(2) If the commission agent offers, concurrently with the
notice on the fulfilment of the commission, to cover the
difference between the price specified by the committent and the
price agreed with the third party, the committent is not entitled
to refuse to admit that the transaction has been entered into at
his or her expense.
Section 419. More Advantageous
Provisions
(1) If a commission agent enters into a transaction under more
advantageous provisions than the ones specified by a committent,
the benefit acquired from entering into such transaction shall be
due to the committent.
(2) Particularly, the sales price exceeding the lowest price
limit specified by the committent, as well as the purchase price
which does not reach the highest price limit specified by the
committent shall be considered as a more advantageous
provision.
Section 420. Goods with Deficiencies
or Damaged Goods
(1) If the goods supplied by a commission agent and the goods
to be sent further have external deficiencies or damages, the
commission agent has the obligation to use his or her rights
against the carrier, forwarder, keeper or seller (in case of a
purchase commission), to provide evidence attesting to the state
of goods, as well as to notify the committent thereof without
delay. If the commission agent fails to fulfil the abovementioned
obligations, he or she shall be liable for the losses caused to
the committent.
(2) If goods are perishable or changes therein which would
cause a decrease in the value of the goods have occurred or can
occur later, and there is insufficient time to receive
instructions from the committent regarding further actions with
the goods or the committent hesitates to provide instructions,
the commission agent is entitled to sell the goods at the
committent's expense in accordance with the provisions of Section
408, Paragraphs two and three of this Law.
Section 421. Transfer of Goods for
Storage or Sale of Goods
If a committent fails to act with the purchased goods or goods
to be sold which are placed in the storage of the commission
agent, although, according to the circumstances of the case, the
committent is obligated to do it, the commission agent is
entitled to, in accordance with the provisions of Section 408 of
this Law, transfer the goods to another person for storage or
sell them.
Section 422. Liability of the
Commission Agent for the Goods
(1) A commission agent shall be liable for the damages,
deterioration, or destruction of the goods stored by him or her
which he or she could have prevented by exercising the diligence
of a respectable and accurate merchant.
(2) The commission agent shall be liable for the fact that the
goods are not insured only if the committent had instructed the
commission agent to insure the goods.
Section 423. Obligation to Check the
Goods and Temporary Storage of Goods
(1) If a commission agent has been entrusted to perform the
procurement commission and if the commission agent and committent
are merchants, the provisions of Sections 411 and 412 of this Law
shall be applicable to the committent's obligation to check the
goods and notify the commission agent of any established
deficiencies of goods, and also to the obligation to store the
goods and the right to sell them.
(2) Also if the committent has not notified the commission
agent in due time of the deficiencies of the goods, the
committent is entitled to request that the commission agent cedes
his or her claims against the third party from whom he or she has
bought the goods at the committent's expense.
Section 424. Claims Arising from
Commission Transaction
(1) A committent is entitled to bring claims arising from a
transaction which a commission agent has entered into at the
committent's expense (including claims regarding the cancellation
of a purchase agreement or reduction of the price for goods)
against a debtor only after the commission agent has ceded these
claims to a committent.
(2) In relations between the committent and the commission
agent or his or her creditors, the claims referred to in
Paragraph one of this Section shall be considered as the claims
of the committent even if they have not been ceded to the
committent yet.
Section 425. Pre-payment and
Post-payment
(1) If a commission agent makes a pre-payment in favour of a
third party without the consent of the committent or agrees
regarding a post-payment, the commission agent shall be liable
for the risk related to such action.
(2) If a commission agent sells goods or securities to a third
party with post-payment without the consent of the committent,
the commission agent has the obligation to immediately pay the
full purchase price to the committent instead of the third
party.
Section 426. Right of the Commission
Agent to Commission and Reimbursement of Expenses
(1) A commission agent has the right to the agreed commission
as soon as and insofar as the third party has fulfilled the
transaction entered into with the commission agent. The
commission agent has the right to a commission even if the
transaction has not been fulfilled due to the fault of the
committent.
(2) The obligation of the committent is to reimburse the
expenses of the commission agent which have been necessary for
the fulfilment of the commission pursuant to the circumstances.
These expenses shall also include consideration for the use of
warehouse premises of the commission agent or another place
suitable for storage and for the use of vehicles for the
fulfilment of the commission.
Section 427. Right of the Commission
Agent to Del Credere
(1) A commission agent who guarantees the fulfilment of the
commitment of a third party has the right to a special
compensation (del credere).
(2) Upon setting in of the term for the fulfilment of the
obligation or the condition of the third party, the commission
agent who has guaranteed the fulfilment of the commitment of the
third party shall be directly liable for the fulfilment of the
relevant commitment, and the commission agent is not entitled to
request that the committent brings his or her claim to the third
party at first.
Section 428. Lawful Right of
Possessory Pledge of the Commission Agent
A commission agent has the lawful right of possessory pledge
to the commission goods in the possession of the commission agent
which ensures the claims of the commission agent against the
committent regarding the payment of commission and del credere,
and also regarding the reimbursement of the expenses necessary
for the fulfilment of the commission.
Section 429. Right of the Commission
Agent to Get Satisfaction from Claims
A commission agent has priority right in comparison with the
committent and the creditors thereof to satisfy the claims
referred to in Section 424 of this Law for which the deadline or
condition for the fulfilment of the claim arising from the
commission transaction has set in. In this respect, the
commission agent is entitled to refuse to cede the claims arising
from the commission transaction in favour of the committent, to
receive and keep the fulfilment provided on the basis of this
claim, to suggest those claims for set-off, and also to cede them
to another person.
Chapter 3
Forwarding Agreement
Section 430. Definition of
Forwarding Agreement
Forwarding agreement shall be such agreement by which a
merchant who provides freight forwarding services (forwarder)
undertakes to organise the delivery of freight to its consignee
at consignor's expense, using transport services of the carrier
and the consignor undertakes to pay the agreed remuneration.
Section 431. Rights and Obligations
of Forwarder
(1) When providing freight forwarding services, the forwarder
is entitled to take the following actions if the parties have not
agreed otherwise:
1) to specify the type of transport and the route of freight
carriage;
2) to choose persons who will deliver freight to the
consignee, to enter into the transport, storage, and forwarding
agreement necessary for the delivery of freight, to provide
information and instructions to the abovementioned persons and to
make the relevant payments.
(2) If the parties have not agreed on the time of freight
delivery, the forwarder has the obligation to ensure the delivery
of freight to its consignee within a reasonable period.
(3) When providing the freight forwarding services, the
forwarder has the obligation to request statements if violations
have been established in the carriage of freight, to participate
in the drawing up of a statement upon the request of the
consignor or consignee, as well as, by ensuring the rights of the
consignor, to submit objections and claims in his or her behalf
in a timely manner.
(4) The forwarder shall also fulfil other agreed obligations
which are related to the organisation of freight delivery,
including insurance, packing, labelling, and clearing customs of
the freight. The forwarder has the obligation to enter into the
necessary agreements with third parties for the fulfilment of the
abovementioned obligation only when such obligation arises from
the forwarding agreement.
(5) The forwarder shall enter into the agreements necessary
for the organisation of freight delivery in his or her name or in
the name of the consignor, if the forwarder has been authorised
for that.
(6) If the forwarder acts as the representative of the
consignor, the forwarder is not entitled to calculate for the
consignor a larger fee for the carriage of freight than he or she
has agreed with the carrier.
Section 432. Packaging, Labelling of
Freight, Accompanying Documents and Obligation to Provide
Information on Freight
(1) A consignor has the obligation to, insofar as it is
necessary, pack and label the freight to be transferred for
forwarding, to submit accompanying documents to the freight
forwarder, as well as to provide him or her with all the
information necessary to the forwarder in order to fulfil his or
her obligations, also information regarding freight to be carried
and stored in accordance with special provisions and for which
special equipment or servicing is necessary. If dangerous goods
which may cause explosion, fire or other damage, endanger human
life, health, personal property or the environment during
carriage or storage due to their properties are transferred for
forwarding, the consignor has an obligation to inform the
forwarder in writing of the hazard type of the freight and the
necessary safety measures.
(2) An order for the delivery of dangerous goods or excisable
goods shall be submitted to the forwarder in writing.
(3) Even if the consignor is not at fault, he or she shall be
liable towards the forwarder for losses and expenses which have
arisen due to the following reasons:
1) the freight has not been adequately packed or labelled;
2) the forwarder has not been informed of the freight being
hazardous;
3) the consignor has not submitted all accompanying documents
referred to in Paragraph one of this Section or has not provided
the necessary information, or the information is incomplete,
incorrect or false.
(4) If the losses or expenses referred to in Paragraph three
of this Section have arisen also due to the actions of the
forwarder, the consignor shall have the obligation to compensate
the losses or reimburse the expenses. The amount of compensation
to be paid shall depend on the extent to which the losses or
expenses were caused by the actions of the consignor or
forwarder.
(5) If the consignor is a consumer, he or she shall, in
accordance with the provisions of Paragraphs three and four of
this Section, be liable towards the forwarder for losses and
expenses, insofar they have arisen due to the fault of the
consignor.
Section 433. Loading and Unloading
of Freight
The consignor shall be responsible for loading freight at the
starting point and the consignee - for unloading at the endpoint
unless provided otherwise in the forwarding agreement.
Section 434. Freight with
Deficiencies or Damaged Freight
(1) If a freight which the forwarder has received from a third
party and which is to be delivered to a consignee has external
deficiencies or damages, the forwarder has the obligation to, by
ensuring the right of the consignor to notify the third party of
these deficiencies or damages without delay, ensure the evidence
certifying the state of the freight, and also to notify the
consignor thereof without delay. If the forwarder does not fulfil
the abovementioned obligations, he or she shall be liable for the
losses caused to the consignor.
(2) If the freight is perishable or changes therein which
would cause decrease in the value of the freight occur or can
occur later, and there is insufficient time to receive
instructions from the consignor regarding further actions with
the freight or the consignor hesitates to provide instructions,
the forwarder is entitled to sell the freight at the consignor's
expense in compliance with the provisions of Section 408,
Paragraphs two and three of this Law.
Section 435. Payment of
Consideration
(1) A consignor has the obligation to pay the agreed
consideration to the forwarder as soon as the forwarder has
performed the freight forwarding service, unless otherwise
specified in the agreement.
(2) If the consideration for the provision of forwarding
services is to be collected from the consignee or another person
in accordance with the arrangement between the consignor and the
forwarder, however, this person does not make the abovementioned
payment, the consignor shall be liable for payment of the
consideration.
Section 436. Claims of the
Consignor
(1) A consignor is entitled to bring forward claims arising
from the agreement which has been entered into by the forwarder
in his or her name at consignor's expense against a debtor only
when the forwarder has ceded these claims to the consignor.
(2) In relations between the consignor and the forwarder or
his or her creditors, the claims referred to in Paragraph one of
this Section shall be considered as the claims of the consignor
also if they have not been ceded to the consignor.
Section 437. Liability of the
Forwarder
(1) The forwarder shall be liable for the non-fulfilment of
the obligations of the third parties attracted for the
implementation of the forwarding agreement if he or she is acting
in his or her name or if one of the following conditions
exists:
1) the forwarder has directly or indirectly undertaken the
liability of the carrier;
2) the forwarder has specified a fee for carriage;
3) the forwarder issues a transport document in his or her
name;
4) the forwarder organises carriage using road transport.
(2) The forwarder shall not be liable for the non-fulfilment
of the obligations of the third parties attracted for the
implementation of the forwarding agreement if he or she acts on
behalf of the consignor and proves that he or she has chosen
these persons duly and carefully.
Section 438. Freight Insurance
The forwarder has the obligation to insure the freight
transferred for forwarding at consignor's expense if it is
requested by the consignor or they have agreed about it in the
forwarding agreement.
Section 439. Obligation of the
Consignor to Reimburse the Forwarder's Expenses
A consignor has the obligation to reimburse the forwarder's
expenses which, based on the circumstances, have been necessary
for the fulfilment of the forwarder's obligations, and also such
expenses which are related to:
1) the increase in customs and other payments or changes in
currency exchange rate;
2) waiting period which has arisen due to circumstances beyond
the control of the forwarder;
3) incompletely, incorrectly or inappropriately drawn up
accompanying documents of the freight submitted by the
consignor.
Section 440. Transfer of Freight for
Storage
If the consignee of the freight, in case of a delay, does not
accept the delivered freight or the freight is suspended during
carriage due to circumstances beyond the control of the
forwarder, it is entitled to transfer the freight for storage to
a warehouse or another safe place at the consignor's expense,
notifying the consignor and the carriage insurer thereof without
delay, if the forwarder has acquired insurance.
[15 April 2010]
Section 441. Liability of the
Forwarder for the Non-preservation of the Freight or Delay of the
Freight Delivery
(1) The forwarder shall be liable for damages, perishing,
shortfall, destruction, loss of the freight or delay of freight
delivery under his or her supervision, which he or she could have
prevented by exercising the diligence of an honest and careful
merchant.
(2) The forwarder shall not be liable for the non-preservation
of the freight (damages, perishing, shortfall, destruction, or
loss), if he or she proves that the freight has not been
preserved:
1) because it was carried in an open vehicle in accordance
with the arrangement between the forwarder and the consignor or
upon request of the consignor;
2) due to damaged packaging thereof if the freight was
packaged by the consignor, or because the consignor used
packaging which did not correspond to the properties or standards
of freight;
3) during its loading or unloading if the loading or unloading
was performed by the consignor or the consignee;
4) due to individual natural properties which can easily cause
freight damages, perishing, shortfall, or destruction, if the
consignor did not inform the forwarder of these properties before
the transfer of the freight for forwarding;
5) due to inappropriate labelling thereof if the freight was
labelled by the consignor, or because the consignor has not
indicated special properties of the freight in the accompanying
documents of the freight, due to which special safety provisions
need to be followed or relevant measures need to be implemented
in order to ensure the preservation of the freight during the
carriage or storage.
(3) When compensating losses for the non-preservation of the
freight, the forwarder shall also return the consideration paid
thereto for the provision of forwarding services and reimburse
other payments related to the carriage of freight in proportion
to the amount of the non-preserved freight, and also expenses
related to determining the amount of compensation for losses in
accordance with the provisions of Section 443 of this Law.
(4) The forwarder shall only be liable for other losses if it
has not fulfilled its obligations in accordance with the
provisions of Section 431 of this Law.
(5) If losses have been caused also due to the actions of the
consignor or due to specific deficiencies of the freight
transferred for forwarding, the forwarder has the obligation to
compensate for losses. The amount of compensation to be paid
shall depend on the extent of the losses have been caused by the
actions of the consignor or the forwarder or the deficiencies of
the freight transferred for forwarding.
Section 442. Reimbursement of the
Freight Value
(1) If the forwarder has the obligation to compensate for the
losses arisen due to damages or perishing of the freight, the
compensation for losses shall be determined in such amount by
which the value of the freight has decreased, but due to the
shortfall, destruction or loss of the freight - according to the
value of the missing, destroyed or lost freight.
(2) The value of freight shall be determined according to the
market price thereof or in accordance with the usual value of
items of the same grade and quality. If freight is transferred
for forwarding with a notified value, the amount of compensation
for losses shall be determined based on this value, if the
forwarder does not prove that the value of the freight
transferred for forwarding was lower.
Section 443. Limits of the Amount of
Compensation for Losses
(1) If the forwarder has the obligation to compensate for the
losses arisen due to damages, deterioration, shortfall,
destruction, or loss of freight, the amount of compensation for
losses may not exceed the amount which corresponds to the 8.33
money units of payment specified by the International Monetary
Fund for each:
1) gross mass kilogram of freight if all freight has been
damaged or lost;
2) gross mass kilogram of the damaged or lost part of the
freight if part of the freight has been damaged or lost.
(2) [19 September 2013 / See Paragraph 35 of Transitional
Provisions]
(3) The limits of the compensation for losses provided for in
Paragraph one of this Section shall not be applicable if the
forwarder or the person referred to in Section 444 of this Law
has acted in bad faith or allowed gross negligence when causing
the losses.
[19 September 2013]
Section 444. Liability of the
Forwarder for Other Persons
The forwarder shall be liable for any illegal action committed
by employees of the forwarder in their work or other persons
employed by his or her company to the same extent as for his or
her own action.
Section 445. Limitation Period of
Claims
(1) The limitation period for claims against the forwarder
regarding damages, perishing, shortfall, destruction, or loss of
the freight transferred for forwarding, and also for the late
delivery of freight shall expire within one year. If the
forwarder has acted in bad faith or allowed gross negligence, the
limitation period for the abovementioned claims shall expire
within three years. The limitation period for all other claims
against the forwarder shall expire within three years.
(2) If the freight transferred for forwarding has not been
preserved due to damages, perishing or shortfall, the limitation
period shall begin from the day on which the freight has been
delivered to the consignee, but due to the destruction or loss of
freight or delay of the delivery of freight - on the day when the
freight should have been delivered to the consignee.
Section 446. Lawful Right of
Possessory Pledge of the Forwarder
(1) The forwarder has the lawful right of possessory pledge to
a freight transferred for forwarding and in the possession of the
forwarder which ensures the claims of the forwarder against the
consignor. The lawful right of possessory pledge shall apply also
to accompanying documents of freight.
(2) If a forwarder has attracted a sub-forwarder in order to
fulfil the obligation agreed in the forwarding agreement for the
provision of freight forwarding services, the claims of the
forwarder and the lawful right of possessory pledge provided for
in Paragraph one of this Section shall be transferred to the
sub-forwarder until he or she satisfies the claims of the
forwarder arising from the forwarding agreement.
Chapter 4
Commercial Storage Agreement
Section 447. Definition of
Commercial Storage Agreement
Commercial storage agreement (hereinafter within the framework
of this Chapter - the storage agreement) shall be such agreement
by which a merchant dealing with the storage of movable
properties (keeper) undertakes to place the property transferred
for storage in a warehouse or in another place suitable for
storage and store it in favour of the depositor, and the
depositor undertakes to pay the agreed consideration.
Section 448. Packaging, Labelling,
Accompanying Documents of the Property and Obligation to Provide
Information on Property
(1) A depositor has the obligation, insofar as it is
necessary, to package and label a property transferred for
storage, to submit accompanying documents to the keeper, and also
to provide to him or her all the information which is necessary
for the keeper to fulfil his or her obligations. If a hazardous
property which under certain conditions due to its properties may
cause explosion, fire or other damages, endanger human life,
health, personal property or the environment is transferred for
storage, the depositor has the obligation to notify the keeper of
the hazard type of the property and the necessary safety measures
in writing.
(2) If the depositor is a consumer, the keeper has the
obligation to, insofar as necessary, package and label the
property transferred for storage. The depositor has the
obligation to inform the keeper of the property being
hazardous.
(3) Even if the depositor is not at fault, he or she shall be
liable towards the keeper for the losses and expenses caused by
the following reasons:
1) the property has not been appropriately packaged or
labelled;
2) the keeper has not been informed of the property being
hazardous;
3) the depositor has not submitted all the accompanying
documents referred to in Paragraph one of this Section or has not
provided the necessary information, or the information is
incomplete, inaccurate, or false.
(4) If the losses or expenses referred to in Paragraph three
of this Section have been caused also due to the actions of the
keeper, the depositor has the obligation to compensate the losses
or reimburse expenses. The amount of the compensation to be paid
shall depend on the extent to which the losses or expenses were
caused by the actions of the depositor or the keeper.
(5) If the depositor is a consumer, he or she shall be, in
accordance with the provisions of Paragraphs three and four of
this Section, liable towards the keeper for losses or expenses
insofar as they have been caused due to the fault of the
depositor.
Section 449. Fungible Property
Storage
(1) A keeper is entitled to combine the fungible property
transferred for storage with any property of the same grade and
quality only if the relevant depositors have explicitly permitted
it.
(2) If a keeper is entitled to combine the fungible properties
transferred for storage, their owners shall obtain joint
ownership right in undivided shares to these properties
transferred for storage starting from the day when the respective
properties are placed in a warehouse or in another place suitable
for storage.
(3) In the case referred to in Paragraph two of this Section,
a keeper may return to each depositor the share due to him or her
without the consent of other joint owners.
Section 450. Property with
Deficiencies or Damaged Property
(1) If a property which a keeper has received from a third
party and which is to be stored in favour of the depositor has
external deficiencies or damages, the keeper has the obligation
to, by ensuring the right of the depositor to notify the third
party of such deficiencies or damages without delay, ensure the
evidence attesting to the condition of the property and also to
notify the depositor thereof without delay. If the keeper fails
to fulfil the specified obligations, he or she shall be liable
for the losses caused to the depositor.
(2) If after accepting the property for storage such changes
occur or are likely to occur in such property which would cause
its deterioration and destruction or losses to the keeper, he or
she has the obligation to notify the depositor thereof without
delay, but, if a warehouse receipt has been issued, the last
legitimised holder of the warehouse bill of lading known by him
or her, as well as to request instructions from the depositor
(the holder of the warehouse receipt) for further actions in this
matter. If the keeper cannot receive the abovementioned
instructions within an appropriate period, the keeper is entitled
to sell the property transferred for storage at the expense of
the depositor (holder of the warehouse receipt), complying with
the provisions of Section 408, Paragraphs two and three of this
law, or at his or her discretion in accordance with the actions
of a respectable and accurate merchant, to take other actions
necessary for the preservation of the property.
Section 451. Inspection of the
Property Transferred for Storage and Measures for Its
Preservation
A keeper has an obligation to allow the depositor to inspect
the property transferred for storage in usual working time, to
take samples, and also to allow the taking of the measures
necessary for the preservation of property. The keeper has the
right and, if the fungible properties transferred for storage are
combined, an obligation to take the measures necessary for the
preservation of the property by themselves.
Section 452. Length of Storage
(1) A depositor may reclaim from the keeper the property
transferred for storage at any time.
(2) If the storage agreement has been entered into for an
indefinite period, the depositor is entitled to give a notice on
the termination of the storage agreement one month in advance. If
the depositor has an important reason, he or she is entitled to
give the notice on the termination of the storage agreement, not
taking into account the notice period.
(3) A keeper may request the depositor to take back the
property transferred for storage only after expiration of the
agreed period, but, if the storage agreement has been entered
into for an indefinite period, by giving a notice of termination
of the storage agreement one month in advance. If the keeper has
an important reason, he or she is entitled to demand the
depositor to take back the property transferred for storage
before the expiration of the agreed period, not taking into
account the notice period. If the keeper has issued a warehouse
receipt, the notice on the termination of the storage agreement
and the claim regarding the taking back of the property shall be
directed against the last legitimised holder of the warehouse
receipt known thereto.
Section 453. Insurance of the
Property Transferred for Storage and Transfer for Storage to a
Third Party
(1) A keeper has the obligation to insure the property
transferred for storage at expense of the depositor, if it is
requested by the depositor or if they have agreed upon it in the
storage agreement.
(2) A keeper is entitled to pass on a property transferred for
storage to a third party for storage only if the depositor has
allowed it.
Section 454. Obligation of the
Depositor to Reimburse Expenses of the Keeper
A depositor has the obligation to reimburse expenses to the
keeper which have been necessary for the fulfilment of the
obligations of the keeper based on the circumstances.
Section 455. Responsibility of a
Keeper for the Property Transferred for Storage
(1) A keeper shall be liable for such damages, deterioration,
shortfall or destruction of a property transferred for storage
from the time of the receipt of the property until return thereof
which he or she could have prevented, observing the diligence of
a respectable and accurate merchant.
(2) The provisions of Paragraph one of this Section shall also
be applicable if the keeper has transferred the property
transferred for storage further to a third person in accordance
with the provisions of Section 453, Paragraph two of this
Law.
Section 456. Limitation Period and
Beginning of Limitation Period
(1) The limitation period for claims against a keeper
regarding damages, deterioration, shortfall, delay of return or
destruction of a property transferred for storage shall expire
within one year. If the keeper has acted in bad faith or admitted
gross negligence, the limitation period for the respective claims
shall expire within three years.
(2) If the property transferred for storage has not been
preserved due to damages, deterioration or shortfall, the
limitation period shall begin on the day when the property
transferred for storage is returned, but due to the delay of
return of the property - on the day when the property should have
been returned. In the event of complete destruction of the
property transferred for storage, the limitation period shall
begin on the day when the keeper notifies the depositor or the
last legitimised holder of the warehouse receipt known by him or
her of such destruction if a warehouse receipt has been
issued.
Section 457. Lawful Right of
Possessory Pledge of a Keeper
(1) A keeper has the lawful right of possessory pledge to the
property transferred for storage and in the possession of the
keeper, and this right ensures the claims of the keeper against
the depositor arising from the storage agreement.
(2) If a warehouse receipt of order is passed on with an
endorsement, the keeper has the lawful right of possessory pledge
towards the legitimised holder of the warehouse receipt, and this
right ensures only those claims regarding the payment of
consideration or reimbursement of expenses which arise from the
warehouse receipt or the existence of which was known or unknown
to the legitimised holder of the warehouse receipt at the time of
the acquisition of the warehouse receipt due to gross
negligence.
Section 458. Warehouse Receipt
(1) After accepting the property for storage, the keeper may
issue a warehouse receipt. A warehouse receipt is a security in
which the claim against the keeper regarding the return of the
property transferred for storage is registered. A warehouse
receipt may be issued as a registered securities, bearer
securities or order instrument.
(2) The following information shall be indicated in a
warehouse receipt:
1) a designation that the deed is a warehouse receipt;
2) the place and date of issuance of the warehouse
receipt;
3) the name, registration number, and legal address or the
given name, surname, personal identity number of the depositor
(if the person does not have a personal identity number - the
date of birth, the number and date of issue of a personal
identification document, the country and authority which issued
the document), and the address where he or she can be
reached;
4) the firm name, registration number and legal address of the
keeper;
5) the place (the address of the warehouse or other place
suitable for storage) and the date when the property has been
accepted for storage;
6) the designation adopted for the characterisation of the
property and the type of its packaging, but for a dangerous
property - special and common designation thereof;
7) the number of packaging units, special labelling and
numbering thereof;
8) the gross mass or quantity of the property in other units
of measurement;
9) a note as to whether the fungible property transferred for
storage is combined with other properties of the same grade and
quality in accordance with the provisions of Section 449 of this
Law.
(3) In addition to the mandatory information specified in
Paragraph two of this Section, a keeper may also indicate other
information in a warehouse receipt.
(4) A warehouse receipt shall be signed by the keeper.
[15 April 2010; 16 June 2022]
Section 459. Effect of a Warehouse
Receipt
(1) A warehouse receipt shall prevail in mutual legal
relations between the keeper and the legitimised holder of the
warehouse receipt.
(2) A warehouse receipt shall establish an assumption that, in
terms of external appearance and status, and also the number of
units, labelling and numbering of packages, the keeper has
accepted for storage such property and packaging thereof as
described in the warehouse receipt. If the keeper has checked the
gross weight or amount of the property transferred for storage in
other units of measurement or also the content of the property
and has indicated the results of such check in the warehouse
receipt, the warehouse receipt shall establish an assumption that
the weight, amount or content of the property corresponds to the
information indicated in this receipt. Evidence to the contrary
shall not be permissible if the warehouse receipt has been
transferred to a bona fide third party.
(3) The storage agreement shall prevail in mutual legal
relations between the keeper and the depositor.
Section 460. Return of the Property
Transferred for Storage in Return for a Warehouse Receipt
(1) If a warehouse receipt has been issued, a keeper has an
obligation to return the property transferred for storage only
upon receipt of the relevant warehouse receipt where a note on
the return of the property is made.
(2) When returning a part of the properties transferred for
storage, a relevant note shall be made in the warehouse receipt.
The warehouse receipt shall be signed by the keeper.
(3) A keeper shall be liable towards the legitimised holder of
a warehouse receipt for the losses caused due to the property
transferred for storage being returned without receiving the
warehouse receipt or without making the note referred to in
Paragraph two of this Section.
Section 461. Legitimation with a
Warehouse Receipt
Such person shall be legitimised to receive a property
transferred for storage to whom the property is to be returned in
accordance with the warehouse receipt or who has been transferred
a warehouse receipt of order with endorsement. A keeper has no
obligation to check the authenticity of an endorsement.
Section 462. Consequences of the
Endorsement of the Warehouse Receipt of Order
In terms of obtaining the rights, the transfer of a warehouse
receipt of order with endorsement to another person shall, if the
keeper has accepted a property for storage, cause the same legal
consequences as in the case of transfer of a property transferred
for storage in the ownership or possession of another person.
Chapter 5
Leasing Contract
Section 463. Definition of Leasing
Contract
(1) A leasing contract is such a contract under which a
merchant (lessor) undertakes to acquire in the ownership a
property selected by the lessee from a third party (seller)
selected by the lessee and to ensure the transfer of this
property in the use of the lessee, and the lessee undertakes to
accept this property and pay the agreed consideration.
(2) The provisions of the Civil Law and this Law for the
purchase agreement shall be applicable to the leasing contract in
the following cases, in so far as they are not in conflict with
the provisions of this Chapter:
1) if it is agreed that the lessee has the obligation to buy
out the property transferred for leasing;
2) if it is agreed that at the end of the duration of the
leasing contract, provided that the lessee has no unfulfilled
commitments against the lessor, the lessee has the right to
obtain the property transferred under leasing into ownership
without additional consideration or for consideration which on
the date when such opportunity could be used will be sufficiently
low so that a justified certainty existed on the day of
commencement of the use that the lessee will use this
opportunity.
(3) In other cases, the provisions of the Civil Law for the
leasing contract shall be applicable to the leasing contract,
insofar as they are not in conflict with the provisions of this
Chapter.
Section 464. Obligation of the
Lessee to Check the Property and Liability for Actions of the
Property Seller
(1) A lessee, as a respectable and accurate proprietor, has
the obligation to check as soon as possible the conformity of the
property to the provisions of the contract before consent of the
property.
(2) A lessee shall take the risk of failure to deliver the
property.
Section 465. Property with
Deficiencies
(1) If deficiencies of a property transferred under leasing
are established, a lessee has the obligation to notify the seller
thereof without delay and to bring claims against the seller
arising from the concluded purchase agreement, as well as claims
arising from wrongful self-enrichment.
(2) If the property with deficiencies is replaced by a
property of the same grade without deficiencies, such exchange of
the property shall not affect the validity of the leasing
contract.
Section 466. Use of the Property
Transferred under Leasing and Risks Related to Such Property
(1) A lessee has the obligation to use the property
transferred under leasing as a respectable and accurate
proprietor in accordance with the objectives and procedures
specified in the leasing contract, but if such objectives and
procedures have not been agreed upon - in accordance with the
common targets and procedures, as well as to cover all the
expenses related to the maintenance of the property transferred
under leasing.
(2) The deficiencies (including legal restrictions) of a
property transferred under leasing due to which the property
cannot be used shall not affect the obligation of the lessee to
pay the consideration agreed in the leasing contract.
(3) The risk of deterioration, destruction, theft or loss of
the property shall be transferred to the lessee after acceptance
of the property.
(4) In the event of the deterioration, destruction, theft, or
loss of the property transferred under leasing, the lessee has
the obligation to compensate all losses to the lessor, except for
the loss of predicted profit.
(5) If the use of a property transferred under leasing is
connected with increased hazard to others, all the risks arising
from such hazards and the liability for losses which have arisen
due to the impact of the source of the increased hazard shall be
transferred to the lessee after receipt of this property.
Section 467. Immediate Termination
by the Lessor
A lessor is entitled to terminate a leasing contract
immediately and to take over the subject-matter of leasing in his
or her actual possession without notification if:
1) the lessee who has failed to meet the deadline for the
payment of the agreed consideration has not paid this
consideration within 15 days after receipt of a reminder from the
lessor;
2) the seller has failed to transfer a property to the lessee
within the period specified in the purchase contract or the
ownership rights to this property have not been transferred to
the lessor due to circumstances beyond his or her control;
3) the lessee has, when entering into the leasing contract,
provided the lessor with false information on the circumstances
which are essential when entering into the leasing contract.
[15 April 2010]
Chapter 6
Factoring Contract
Section 468. Definition of Factoring
Contract
A factoring contract is such a contract by which one
contracting party (customer) undertakes the obligation to
transfer the known monetary claims of the customer against a
third party (debtor) to another contracting party which is a
merchant (factor) for the agreed consideration, and also to
fulfil other commitments specified in the factoring contract.
Section 469. Claims to be
Transferred
(1) A customer is entitled to transfer to a factor such
monetary claims the fulfilment of the commitments of which has
already set in and also such claims which will arise in the
future (future claims). The claims to be transferred shall be
characterised in the factoring contract so the current claims
could be determined at the time of entering into the factoring
contract, and future claims - not later than at the time of their
occurrence.
(2) A future claim shall be transferred to the factor at the
time of its occurrence.
Section 470. Validity of Transfer of
Claim
An arrangement concluded by a debtor who is a merchant and a
customer under which the transfer of the customer's claims to
another person is prohibited or restricted shall not have effect
as regards the transfer of claims to such person who provides
factoring services.
Section 471. Liability of a Customer
for the Authenticity and Safety of Claim
(1) A customer shall be liable towards the factor for the
authenticity of the claim transferred or to be transferred,
unless otherwise agreed upon in the factoring contract.
(2) A customer shall not be liable towards the factor for the
safety of the claim transferred or to be transferred, unless
otherwise agreed upon in the factoring contract.
Section 472. Further Transfer of
Claims
A factor is not entitled to transfer a claim transferred
thereto further to another person, unless otherwise provided for
in the factoring contract.
Section 473. Payment
A debtor has the obligation to fulfil the commitment
corresponding to the claim by making a payment in favour of the
factor, if the debtor has received a notice from the customer or
the factor on the transfer of this claim to the factor. The
payment in favour of the factor shall release the debtor from the
commitments corresponding to the claim against the customer.
Chapter 7
Franchise Agreement
Section 474. Definition of Franchise
Agreement
A franchise agreement is such contract by which a merchant
(franchisor) grants another contracting party (franchisee) the
right to use a trade mark, other intellectual property rights,
know-how for the sale, distribution of goods or provision of
services in accordance with the system developed and verified by
the franchisor (franchise), and the franchisee pays the agreed
consideration.
Section 475. Form of a Franchise
Agreement
The franchise agreement shall be entered into in writing.
Section 476. Obligations of a
Franchisor
(1) A franchisor has an obligation to provide the following
information in writing on the franchise to the potential
franchisees prior to entering into a franchise agreement:
1) a general characterisation of the offered franchise which
corresponds to the actual circumstances;
2) evidence of the existence of the rights included in the
franchise and general characterisation of the know-how;
3) duration of the franchise agreement and the possibilities
for its extension;
4) the amount of remuneration for the use of the franchise and
the procedures for payment thereof;
5) other information, which the franchisor considers as
necessary when entering into the franchise agreement.
(2) A franchisor has an obligation to ensure that the
intellectual property rights specified in the franchise agreement
are valid throughout the period of validity of this
agreement.
(3) In accordance with the provisions of the franchise
agreement, the franchisor has an obligation to cooperate with the
franchisee and to provide support to him or her throughout the
period of validity of the franchise agreement. The franchisor, in
particular, has an obligation to train the franchisee, to provide
him or her with commercial and technical assistance, accounting,
delivery, logistics, management services, as well as other
services and information which is necessary for the use of the
franchise in accordance with the provisions of the franchise
agreement.
(4) A franchisor shall transfer to the franchisee all
documents (instructions, permissions, licences, technical
regulations, descriptions etc.), which are necessary for the use
of the franchise in accordance with the franchise agreement.
(5) If a franchisee has an obligation to purchase goods only
from the franchisor or a person specified by him or her, the
franchisor has an obligation to ensure the supply of goods in
reasonable time.
(6) In case of application of Paragraph five of this Section,
a franchisor has an obligation to notify the franchisee in
reasonable time of a delay in the delivery limit of goods or the
failure to deliver goods in the previously agreed amount.
(7) In accordance with the provisions of the franchise
agreement, the franchisor has an obligation to ensure the
measures of advertising and visibility of the franchise, taking
care of maintaining the good reputation of the franchise.
Section 477. Obligations of a
Franchisee
(1) A franchisee has an obligation to provide the franchisor
with current and true information on the circumstances which are
essential when entering into a franchise agreement prior to
entering into the franchise agreement.
(2) A franchisee has an obligation to use the franchise in
accordance with the provisions of the franchise agreement,
obeying reasonable instructions of the franchisor, respecting the
trade mark, other intellectual property rights, know-how for the
sale, distribution of goods or provision of services of the
franchisor and without harming the good reputation of the
franchisor.
(3) A franchisee has an obligation not to use the trade
secrets which have been entrusted or become known to the
franchisee using the franchise contrary to the objective of the
franchise agreement and not to disclose them to third parties.
The franchisee also has such an obligation for five years after
expiry of the franchise agreement.
(4) The franchisee has an obligation to provide the franchisor
with information necessary for the fulfilment of commitments of
the franchisor agreed upon in the franchise agreement, and also
to allow the franchisor to check the work of the franchisee at
the place where goods are sold or services are provided during
the regular working hours.
Section 478. Consequences of a
Franchise Agreement
(1) A legally concluded franchise agreement shall impose an
obligation on the contracting parties to fulfil the promised. Any
of the contracting parties is entitled to terminate the franchise
agreement in the cases and in accordance with the procedures
specified in the Law and franchise agreement.
(2) The contracting parties may unilaterally withdraw from the
franchise agreement if the fulfilment of commitments has become
too burdensome due to changes in impartial circumstances or if
any contracting party, prior to entering into the franchise
agreement, has provided false information on the circumstances
which are essential when entering into the franchise
agreement.
(3) If the fulfilment of commitments has become too burdensome
due to impartial changes in circumstances, the contracting
parties have an obligation to conduct discussions in order to
amend or terminate the agreement. A contracting party may refer
to impartial changes in circumstances if:
1) the changes in circumstances have occurred after entering
into the franchise agreement;
2) the contracting party could not predict the changes in
circumstances at the time of entering into the franchise
agreement;
3) the contracting party has not undertaken the risk of change
in circumstances.
(4) If the contracting parties are not able come to an
agreement on amendments to the franchise agreement or termination
thereof within a month, any of the contracting parties is
entitled to request that a court:
1) terminates the contract, determining the date of
termination;
2) amends the contract, determining fair division of losses
and benefits caused by the changes in circumstances.
Section 479. Restriction on
Competition
(1) An arrangement by which the professional activity of a
franchisee is limited after the termination of the franchise
agreement (restriction on competition) shall be entered into in
writing.
(2) The time limit for the restriction of competition may not
exceed one year, counting from the day of the termination of the
franchise agreement.
(3) A franchisor has an obligation to pay the franchisee the
agreed consideration for the period of the restriction of
competition. If the franchisor withdraws from the franchise
agreement due to threats to the good reputation or due to such
substantial reason which was based on blameable action of the
franchisee, the franchisee shall lose his or her right to receive
consideration for the period of the restriction of
competition.
Section 480. Application of the
Competition Law
The provisions of this Law shall not limit the legislation
which has been included in the laws and regulations governing the
field of competition law as regards the franchise agreement.
Transitional
Provisions
1. This Law shall come into force on 1 January 2002.
[26 June 2001]
2. The procedures for the coming into force of this Law shall
be determined by a special law.
3. The Cabinet shall, until 1 March 2001, ensure the necessary
funding for the implementation of the conditions for the coming
into force of the Commercial Law.
[21 December 2000]
4. In order to ensure the compliance of the articles of
association of a capital company and a partnership with the
requirements of this Law in respect of the condition that members
of the executive board or members of the partnership are not
limited in their right of representation by a procurator, the
capital company shall submit the relevant amendments to the
articles of association to the Commercial Register Office by 1
June 2005, if it is specified there that one or several members
of the executive board are entitled to represent the capital
company only jointly with a procurator, or the partnership shall
apply the change in the representation model to the Commercial
Register Office, if it is specified in the partnership agreement
that one or several members of the company are entitled to
represent the partnership only jointly with a procurator. Until
making of the relevant amendments to the articles of association
of a capital company or the partnership agreement, but not longer
than until 1 June 2005, the representation model specified in the
articles of association of the capital company or the partnership
agreement shall be in force.
[22 April 2004]
5. The second sentence of Section 149, Paragraph three, Clause
5 and the third sentence of Section 224, Paragraph two of this
Law (regarding the right of a member of the executive board of
the company not to submit a written consent to be a member of the
executive board), and also amendments under which Section 25,
Paragraph two, Clause 5 and Section 75, Paragraph three, Clause 4
of this Law are deleted shall come into force on 1 July 2006.
[16 March 2006]
6. The new wording of Section 10, Paragraph two of this Law,
amendments to the second sentence of Section 38, Paragraph one,
Section 107, Paragraph three, first sentence of Section 149,
Paragraph three, Clause 6, Section 320, Paragraph one, Clause 3,
and also the second sentence of Section 347, Paragraph one,
Clause 9 of the Law (regarding the right of an official of the
Commercial Register Office to certify signature samples) shall
come into force on 1 July 2006.
[16 March 2006]
7. The Cabinet shall, not later than by 1 July 2006, issue the
regulations referred to in Section 15, Paragraph three of this
Law.
[16 March 2006]
8. Starting from 10 April 2006 when amendments to the Law
stipulating that information about an auditor shall not
constitute the information to be entered in the Commercial
Register come into force, an official of the Commercial Register
Office shall, without taking a separate decision and without
applying the provisions of Section 11 of this Law, make an entry
in the Commercial Register on the deletion of such information
from the Commercial Register which contains information on the
auditor of the company.
[16 March 2006]
9. A natural person whose economic activities correspond to
the activities of a commercial agent (Section 45 of this Law) or
a broker (Section 64, Paragraph one of this Law) and who is not
registered in the Commercial Register shall apply himself or
herself for registration in the Commercial Register by 31
December 2008.
[24 April 2008]
10. Amendments regarding Section 181 (deletion of this
Section) shall come into force concurrently with the amendments
to the Law on Annual Statements and Consolidated Annual
Statements which lay down the procedures for the submission of
annual statements and consolidated annual statements.
[24 April 2008]
11. If a joint-stock company has bearer stocks which have not
been recorded in the Latvian Central Depository in accordance
with the provisions of the Financial Instrument Market Law, the
joint-stock company shall, not later than by 31 December 2009,
take the decision on the conversion of the bearer stocks to
registered stocks or ensure that the bearer stocks are recorded
in the Latvian Central Depository.
[24 April 2008]
12. If the articles of association of a joint-stock company do
not specify the principal types of its commercial activities
thereof, the company shall, in compliance with the requirements
laid down in Section 144, Paragraph two, Clause 4 of this Law,
make respective amendments to its articles of association and
submit them to the Commercial Register Office not later than by
31 December 2009.
[24 April 2008]
13. Section 154, Paragraph 3.2 of this Law shall
come into force on 1 June 2008.
[24 April 2008]
14. The opinions on the valuation of the material contribution
provided until 1 June 2008 shall be in force until 31 December
2008.
[24 April 2008]
15. Part D of this Law shall come into force on 1 January
2010.
[18 December 2008]
16. If the limitation period specified in the Civil Law or
another law has not expired on the day of coming into force of
Part D of this Law, but Part D of this Law provides a shorter
limitation period, the limitation period specified in Part D of
this Law and counted from 1 January 2010 shall be applicable. If
the limitation period is longer than the previous limitation
period based on such calculation, the limitation period shall end
on the day when it would have expired in accordance with the
Civil Law or another law or regulation.
[18 December 2008]
17. Section 11, Paragraph four and Section 15, Paragraph
1.1 of this Law shall be in force until 1 May
2012.
[15 April 2010]
18. Amendments to Section 28 of this Law shall come into force
concurrently with the amendments to the law On the Enterprise
Register of the Republic of Latvia which stipulate that, when
forming and registering a firm name of a merchant, the condition
that the firm name of the merchant applied for registration may
not correspond to a firm name or name already applied for
registration or recorded in the registers of the Commercial
Register Office.
[15 April 2010]
19. Amendments to Section 28 of this Law regarding a firm name
being distinguishable from a firm name or name already recorded
in other registers of the Commercial Register Office shall not
affect the right of the merchant to the firm name which has been
recorded in the Commercial Register before coming into force of
these amendments.
[15 April 2010]
20. If a member of the executive board or supervisory board of
a limited liability company was elected until 30 April 2010 and
his or her powers have not expired by 1 May 2010, it shall be
considered that the member of the executive board or supervisory
board has been elected for an indefinite period. This condition
shall not be applicable in case when the term of powers of the
executive board or supervisory board has been determined in the
articles of association of the company.
[15 April 2010]
21. If a member of the executive board or supervisory board of
a joint-stock company was elected by 30 April 2010, his or her
powers shall expire on the date when it would have expired in
accordance with the provisions of this Law which were in force on
the date when the member of the executive board or supervisory
board was elected.
[15 April 2010]
22. Amendments to Section 154, Paragraphs one and
1.1 of this Law (regarding the keeping of the list of
valuators of property contributions) shall come into force on 1
July 2010.
[15 April 2010]
23. Starting from 1 July 2011 when amendments to the Law
stipulating that information on the person's place of residence
is not the information to be recorded in the Commercial Register
come into force, an official of the Commercial Register Office
shall, without taking a separate decision and without applying
the provisions of Section 11 of this Law, make an entry in the
Commercial Register on the deletion of such information from the
Commercial Register which contains information about the person's
place of residence.
[16 June 2011]
24. From 1 July 2011 until 1 April 2014, the provisions of
Section 9, Paragraph four of this Law (stipulating that the
Commercial Register Office shall provide information on the
address of a person where he or she may be reached upon a
substantiated request of the person) shall not apply to such
information on the person's place of residence which has been
entered in the Commercial Register before 1 July 2011.
[16 January 2014]
25. [15 June 2017]
26. The new wording of Section 8, Paragraph five, Clause
4.1 of this Law, amendments to Section 210, Paragraph
one, Clause 9, Section 218, Paragraph one, Section 268, Paragraph
one, Clause 10, Section 284, Paragraph two, as well as Division
XIV1of this Law (regarding the suspension and renewal
of the activities of a merchant) shall come into force on 1
January 2014.
[29 November 2012]
27. The Cabinet shall, until 30 June 2013, prepare and submit
to the Saeima the amendments necessary to the laws and
regulations governing taxes and accounting in relation to the
suspension and renewal of activities of a merchant on the basis
of a decision of the merchant.
[29 November 2012]
28. Section 7, Paragraph four of this Law shall come into
force on 1 January 2014.
[2 May 2013]
29. An official of the Commercial Register Office shall
certify the signature of the person specified in Section 9,
Paragraph one and Section 10, Paragraph two of this Law in full
amount, starting from1 January 2014. Until 31 December 2013, the
official of the Commercial Register Office shall certify the
signature of a person on an application for:
1) entering a merchant in the Commercial Register, if the
application for entering a sole proprietorship in the Commercial
Register has been submitted;
2) entering a capital company in the Commercial Register, if
the capital company is founded by one founder;
3) entering such capital company in the Commercial Register
which conforms to the provisions of Section 185.1,
Paragraph one of this Law.
[2 May 2013]
30. If the application referred to in Section 10, Paragraph
two of this Law or the document appended thereto has been
submitted to the Commercial Register Office until 30 June 2013,
but an official of the Commercial Register Office examines it
after 30 June 2013, he or she is entitled to take the relevant
decision also if the signature on the application or the document
appended thereto has not been notarised (except for the
application for the entering of a merchant in the Commercial
Register and the consent of a person to hold the position of a
member of the executive board of a capital company or a
liquidator of a commercial company).
[2 May 2013]
31. Until 30 June 2013, limited liability companies registered
in the Commercial Register and having more than one shareholder
shall, in compliance with the requirements of Section 187 of this
Law, prepare and submit to the Commercial Register Office the
current register of the shareholders of the company not later
than by 30 June 2015. Until 30 June 2013, limited liability
companies registered in the Commercial Register and having one
shareholder shall submit a register of shareholders prepared in
compliance with the requirements laid down in Section 187 of this
Law concurrently with other changes affecting the transfer of
shares or changes in the equity capital.
[21 May 2015]
32. The provisions of this Law regarding the pre-emption
rights shall be applicable if the transaction of alienation,
including transfer, of the equity capital shares of a limited
liability company has been concluded after 30 June 2013.
[2 May 2013]
33. During the period from 1 July 2013 until 30 June 2014, a
capital company which has been registered in the Commercial
Register until 30 June 2013 is entitled to take the decision in
the meeting of shareholders or stockholders on amendments to the
articles of association, providing that the conduct of the
meeting of shareholders or stockholders shall be notarised by a
sworn notary (Paragraph 3.1 of Section 9), with a
simple majority of votes of the shareholders or stockholders
present in the meeting of shareholders or stockholders.
[2 May 2013]
34. Amendments to Section 333.3 of this Law
regarding deletion of Paragraph six and amendments to Section
333.5 regarding deletion of Paragraph three shall come
into force on 1 January 2014.
[2 May 2013]
35. Amendments to the introductory part of Section 75,
Paragraph one and Clause 1, Section 151, Paragraph two, Section
154, Paragraph two, Section 172, Paragraphs two and six, Section
185, Section 186, Paragraph one, Section 225 (by which monetary
amounts in lats are expressed in euros), and also the new wording
of Section 230 and deletion of Section 443, Paragraph two of this
Law shall come into force on 1 January 2014.
[19 September 2013]
36. Starting from 1 January 2014, when the amendments to this
Law regarding the denomination of the equity capital and nominal
value of an equity capital share (stock) of a capital company
from lats to euros come into force, an official of the Commercial
Register Office may take the decision to enter the capital
company in the Commercial Register if the equity capital and
nominal value of an equity capital share (stock) has been
expressed in lats in the documents of incorporation, and the
application for the entry of the capital company in the
Commercial Register has been submitted to the Commercial Register
Office by 31 December 2013.
[19 September 2013]
37. If the equity capital of a capital company is expressed in
lats, starting from 1 January 2014:
1) the nominal value of an equity capital share of a limited
liability company must be expressed in whole lats and the amount
of equity capital may not be less than the amount laid down in
Section 185 of this Law, taking into account the exchange rate of
lats against euros which has been determined by the Council of
the European Union in accordance with Article 140(3) of the
Treaty on the Functioning of the European Union;
2) the nominal value of an equity capital share of a limited
liability company which conforms to the conditions of Section
185.1, Paragraph one of this Law must be expressed in
whole lats and the amount of the equity capital may not be less
than the amount laid down in Section 185.1 of this
Law, taking into account the exchange rate of lats against euros
which has been determined by the Council of the European Union in
accordance with Article 140(3) of the Treaty on the Functioning
of the European Union;
3) the nominal value of a stock of a joint-stock company must
be expressed in whole lats and the amount of equity capital may
not be less than the amount laid down in Section 225 of this Law,
taking into account the exchange rate of lats against euros which
has been determined by the Council of the European Union in
accordance with Article 140(3) of the Treaty on the Functioning
of the European Union.
[19 September 2013]
38. A capital company whose equity capital is expressed in
lats shall, from 1 January 2014 until 30 June 2016, submit the
Commercial Register Office amendments to the articles of
association providing for the denomination of the equity capital
and the nominal value of an equity capital share (stock) from
lats to euros.
[19 September 2013]
39. Starting from 1 July 2014, when submitting amendments to
the articles of association to the Commercial Register Office, a
capital company whose equity capital is expressed in lats shall
concurrently provide in the articles of association for the
denomination of the equity capital and the nominal value of an
equity capital share (stock) from lats to euros.
[19 September 2013]
40. If a limited liability company submits amendments to the
articles of association which provide for the denomination of the
equity capital and the nominal value of an equity capital share
from lats to euros to the Commercial Register Office in
accordance with Paragraph 38 or 39 of the Transitional Provisions
of this Law, it shall additionally submit the last division of
the register of shareholders in which the nominal value of an
equity capital share is expressed in euros.
[19 September 2013]
41. The nominal value of an equity capital share (stock)
acquired as a result of denomination conducted in conformity with
Section 22, Paragraphs two and three of the Law on the Procedure
for Introduction of Euro shall be rounded down to the nearest
value which can be divided by the minimum nominal value of the
equity capital share (stock) in euros without remainder. The
capital company may determine another nominal value of the equity
capital share (stock) if such is necessary for compliance with
the principles laid down in the Section 22, Paragraph one of the
Law on the Procedure for Introduction of Euro.
[19 September 2013]
42. The remaining value of the equity capital shares (stocks)
acquired as a result of denomination [including by determining
another nominal value of the equity capital share (stock)]
conducted in conformity with Section 22, Paragraph three of the
Law on the Procedure for Introduction of Euro which is disbursed
to shareholders (stockholders) of the capital company or
transferred into the reserves of the capital company shall be the
value which cannot be expressed in new equity capital shares
(stocks) and granted to shareholders (stockholders) of the
capital company in proportion to the equity capital shares
(stocks) belonging to them.
[19 September 2013]
43. The denomination of the equity capital and equity capital
share (stock) of the capital company from lats to euros which is
conducted in conformity with Section 22 of the Law on the
Procedure for Introduction of Euro and Paragraphs 41 and 42 of
the Transitional Provisions of this Law shall not be considered
as the reduction of the equity capital of the capital company
within the meaning of this Law. In an application to the
Commercial Register Office, the executive board shall certify
that the principles laid down in Section 22, Paragraph one of the
Law on the Procedure for Introduction of Euro have been complied
with in the denomination of the equity capital and equity capital
share (stock) and the interests of creditors are not
affected.
[19 September 2013]
44. Starting from 1 January 2014, the decision of the meeting
of shareholders (stockholders) of a commercial company on
amendments to the articles of association providing for the
denomination of the equity capital and the nominal value of an
equity capital share (stock) from lats to euros shall be taken
with a simple majority of votes of the shareholders
(stockholders) present in the meeting of shareholders
(stockholders).
[19 September 2013]
45. If an application for amendments to the articles of
association of a capital company and the last division of the
register of shareholders of a limited liability company are
submitted to the Commercial Register Office in the period from 1
January 2014 until 30 June 2016, and the decision of the meeting
of shareholders (stockholders) on amendments to the articles of
association, the full text of the new wording of the articles of
association, and the last division of the register of
shareholders of a limited liability company only provide for the
denomination of the equity capital and the nominal value of an
equity capital share (stock) or another monetary amount specified
in the articles of association from lats to euros:
1) a capital company shall not be subject to the requirement
for the notarial certification of signatures on the minutes of
the meeting of the shareholders (stockholders) or derivative
thereof, a new full wording of the articles of association and
the last division of the register of shareholders of a limited
liability company;
2) a capital company shall be released from the State fee for
the registration of the amendments to the articles of association
and the last division of the register of shareholders in the
Commercial Register, and for making the entries in the Commercial
Register which are related to the denomination of the equity
capital and the nominal value of an equity capital share (stock)
or another monetary amount specified in the articles of
association from lats to euros;
3) a capital company shall be released from the fee for the
promulgation of such entries and information in the official
gazette Latvijas Vēstnesis which are related to the
denomination of the equity capital and the nominal value of an
equity capital share (stock) or another monetary amount specified
in the articles of association from lats to euros.
[19 September 2013]
46. Paragraph 45, Sub-paragraphs 2 and 3 of these Transitional
Provisions shall also be applied if a limited liability company,
in addition to the amendments to the articles of association
providing for the denomination of the equity capital and the
nominal value of an equity capital share (stock) from lats to
euros, submits to the Commercial Register Office the current
register of shareholders of the company in accordance with
Paragraph 31 of these Transitional Provisions.
[19 September 2013]
47. Starting from 1 January 2014, the Commercial Register
Office shall, by 1 July 2014, express in euros the amount of the
contribution of each limited partner and the total amount of the
contributions of limited partners which has been expressed in
lats, taking into account the exchange rate of lats against euros
which has been determined by the Council of the European Union in
accordance with Article 140(3) of the Treaty on the Functioning
of the European Union. The entry shall be promulgated in the
official gazette Latvijas Vēstnesis free of charge.
[19 September 2013]
48. The new wording of Section 8, Paragraph five, Clause 7 of
this Law (regarding the information which shall be entered in the
Commercial Register on the guardian of a sole proprietorship or a
member of a partnership with the right of representation) and
Section 8, Paragraph five, Clause 7.1 of this Law
shall come into force on 1 September 2014.
[16 January 2014]
49. Until 1 October 2014, the Commercial Register Office
shall, without taking a separate decision, update the information
entered in the Commercial Register until 31 August 2014 on the
trustee of a sole proprietorship by replacing the name and
surname of the trustee with the information on the establishment
of trusteeship.
[16 January 2014]
50. Section 161.1 of this Law, as well as
amendments to Section 161, Paragraph four and Section 182,
Paragraph three of this Law (regarding the procedures for the
determination, calculation, and disbursement of extraordinary
dividends) shall come into force on 1 July 2014.
[16 January 2014]
51. Until 1 March 2014, the Cabinet shall draw up and submit
to the Saeima the necessary amendments to the laws and
regulations governing taxes and accounting in relation to the
procedures for the determination, calculation, and disbursement
of extraordinary dividends.
[16 January 2014]
52. If a capital company fails to provide the documents
referred to in Paragraph 38 or 40 of the Transitional Provisions
of this Law by 30 June 2016, the Commercial Register Office shall
recalculate the equity capital entered in the Commercial Register
in euros without taking a separate decision. The equity capital
shall be expressed in whole euros by taking into account the
exchange rate of lats against euros which has been determined by
the Council of the European Union in accordance with Article
140(3) of the Treaty on the Functioning of the European
Union.
[21 May 2015]
53. If the Commercial Register Office has recalculated the
equity capital in conformity with Paragraph 52 of the
Transitional Provisions of this Law, the capital company shall
concurrently denominate the equity capital and share of the
equity capital when applying for changes in the entries of the
Commercial Register or the registration of documents (attachment
to the registration file) to the Commercial Register Office.
[21 May 2015]
54. Amendments to Section 207, Paragraph two and Section 264,
Paragraph two of this Law providing the obligation for the
Commercial Register Office to promulgate the notice on the
decision taken by the company to reduce the equity capital at the
expense of the capital company shall come into force on 1 January
2018. Until 31 December 2017, a capital company shall indicate in
the application for the reduction of equity capital the date when
the notice on the reduction of equity capital has been published
in the official gazette Latvijas Vēstnesis.
[15 June 2017]
55. Amendments to Section 255 of this Law providing for a new
wording of the Section shall come into force on 1 January 2018.
If a joint-stock company has transferred employee stocks to an
employee or member of the executive board until 1 January 2018
and employment relationship between the joint-stock company and
employee ends or the member of the executive board has been
removed from the position or left the position, the provisions
which were in force at the time of the acquisition thereof shall
be applied to actions with employee stocks.
[15 June 2017]
56. Amendments to Section 169.1 of this Law
regarding the administrative liability of the members of the
executive board for the violations of the provisions for keeping
the register of shareholders shall come into force concurrently
with the relevant amendments to the Latvian Administrative
Violations Code.
[15 June 2017]
57. Amendment regarding the deletion of Section
17.1 of this Law shall come into force concurrently
with the amendments to the Law on the Prevention of Money
Laundering and Terrorism Financing that provides the obligation
for legal persons to identify and disclose their beneficial
owners, and also to submit information on beneficial owners to
the Enterprise Register of the Republic of Latvia.
[15 June 2017]
58. New Sections 189.1 and 189.2 of this
Law (regarding the right of first refusal of the shareholders of
limited liability companies if shares of the equity capital are
sold by a sworn bailiff, administrator of insolvency proceedings
or they are sold by using the right of commercial pledge), and
also amendments regarding the consideration of the previous
Section 189.1 as Section 189.3 shall come
into force on 1 January 2018.
[15 June 2017]
59. If a limited liability company has shares of various
categories, the Commercial Register Office has the right, until
31 December 2023, by adding a division of the register of
shareholders to the registration file, not to register the
information on the equity capital shares owned by the person in
electronic form in the information system of the Commercial
Register Office. In such case, Section 4.11, Paragraph
one, Clause 2 and Paragraph four of the law On the Enterprise
Register of the Republic of Latvia shall not be applied to the
issuing of the information on the equity capital shares owned by
the person and the Commercial Register Office shall issue
information on the equity capital shares owned by the person in
accordance with Section 4.10, Paragraph five of the
law On the Enterprise Register of the Republic of Latvia by
issuing the division of the register of shareholders that is
attached to the registration file of the company.
[17 December 2020]
60. Entries made in the Commercial Register until 31 July 2021
shall be promulgated in the official gazette Latvijas
Vēstnesis. Information on documents of incorporation and
their amendments, on draft reorganisation agreement and
amendments thereto which have been attached to the registration
file until 31 July 2021 shall be promulgated in the same way.
Entries and information for promulgation shall be submitted by
the official of the Commercial Register Office within three days
(excluding holidays and public holidays) from the day of making
the entry or from the day when the document is attached to the
registration file.
[6 July 2021]
61. Section 11, Paragraph three of this Law (in relation to
indicating the date of making the entry in the Commercial
Register and attaching the document to the registration file)
shall come into force on 1 July 2023.
[6 July 2021]
62. Until the moment when the Commercial Register Office and
the register of the relevant Member State referred to in Section
8, Paragraph 4.1 of this Law ensure the transfer of
information and documents in the system of interconnection of
registers, not only the documents referred to in Section 25,
Paragraph three, Clauses 2 and 4 of this Law but also the
documents referred to in Clauses 1 and 3 shall be attached to the
application for the entry of a branch of a capital company of a
Member State in the Commercial Register. The Commercial Register
Office shall publish on its website the list of Member States
which ensure transfer of information and documents in the system
of interconnection of registers.
[6 July 2021]
63. Amendments regarding the deletion of the second sentence
of Section 333.3, Paragraph three of this Law, and
also amendments regarding the new wording of Section
333.4, Paragraph one of this Law which provide the
obligation for the Commercial Register Office to publish notices
on its website shall come into force on 1 July 2023.
[6 July 2021; 11 May 2023]
64. By 30 June 2023, the notices referred to in Section 207,
Paragraph two, Section 264, Paragraph two, Section
318.1, Paragraphs three and six, and also Section 324,
Paragraph one of this Law shall be promulgated in the official
gazette Latvijas Vēstnesis. The Commercial Register Office
shall submit notices for publication within three days (excluding
weekends and public holidays) from the day of making the entry or
the day when the document is attached to the registration
file.
[6 July 2021]
65. Amendment to this Law regarding the new wording of the
second sentence of Paragraph one of Section 15 shall be
applicable starting from 1 September 2021. The Cabinet shall, by
31 August 2021, make amendments to the Cabinet Regulation No. 664
of 11 October 2016, Regulations Regarding the State Fee to be
Paid for Making Entries in the Enterprise Register Journal and
Commercial Register and also for Registering the Documents to be
Submitted, ensuring conformity of the amount of the State fee for
making entries in the Commercial Register and appending documents
to the registration file to the second sentence of Section 15,
Paragraph one of this Law. Until the day of entry into force of
the relevant amendments, but not later than until 31 August 2021,
the amount of the State fee for making entries and registration
of the documents to be submitted (attachment to the file) in the
Commercial Register shall be determined in the amount stipulated
in Cabinet Regulation No. 664 of 11 October 2016, Regulations
Regarding the State Fee to be Paid for Making Entries in the
Enterprise Register Journal and Commercial Register and also for
Registering the Documents to be Submitted (the wording effective
on 31 July 2021).
[6 July 2021]
66. Until 30 June 2023, a joint-stock company registered in
the Commercial Register and having:
1) registered stocks and bearer stocks shall, not later than
by 30 June 2024, submit the Commercial Register Office amendments
to the articles of association providing that all stocks of the
company shall be either registered stocks or dematerialised
stocks. Concurrently with the amendments to the articles of
association, the company shall submit to the Commercial Register
Office the information or documents referred to in Sub-paragraph
2 or 3 of this Paragraph;
2) registered stocks shall, in compliance with the
requirements laid down in Section 235 of this Law and not later
than by 30 June 2024, prepare and submit to the Commercial
Register Office the current register of the stockholders of the
company;
3) bearer stocks shall, not later than by 30 June 2024, submit
to the Commercial Register Office the application referred to in
Section 236.1, Paragraph four of this Law.
[16 June 2022]
67. In the period from 1 July 2023 until 30 June 2024, the
meeting of stockholders is entitled to take the decision on the
amendments to the articles of association referred to in
Paragraph 66, Sub-paragraph 1 of these Transitional Provisions
with a simple majority of votes of the stockholders present in
the meeting of stockholders.
[16 June 2022]
68. Until 30 June 2023, a joint-stock company registered in
the Commercial Register and having bearer stocks shall, not later
than by 30 June 2024, submit to the Commercial Register Office
the notices referred to in Section 236.3, Paragraph
five of this Law.
[16 June 2022]
69. Until 30 June 2023, a joint-stock company registered in
the Commercial Register which has not submitted the information
or documents referred to in Paragraph 66 of these Transitional
Provisions shall, starting from 1 January 2024, submit the
information or documents referred to in Paragraph 66 of these
Transitional Provisions concurrently with other changes affecting
amendments to the articles of association or changes in the
equity capital.
[16 June 2022]
70. If a joint-stock company has not submitted the information
and documents referred to in Paragraph 66 of these Transitional
Provisions by 1 July 2024, the Commercial Register Office shall
take the decision to terminate activities of the company in
accordance with the procedures laid down in Section
314.1 of this Law.
[16 June 2022]
71. If the term for the payment of the equity capital of a
capital company specified in the memorandum of association or
regulations for increasing the equity capital expires after 30
June 2023, the equity capital shall be paid up within the term
specified in the memorandum of association or regulations for
increasing the equity capital. The executive board shall, not
later than within five days after expiry of the term for the
payment of the equity capital shares (stocks), submit to the
Commercial Register Office a copy of the current register of
shareholders (stockholders) reflecting the status of the payment
of the equity capital shares (stocks).
[16 June 2022]
72. Starting from 1 July 2023, when the amendments to this Law
stipulating that the subscribed equity capital is not information
to be entered in the Commercial Register come into force, an
official of the Commercial Register Office shall, without taking
a separate decision and without applying the provisions of
Section 11 of this Law, update information on the equity capital
of the capital company in the Commercial Register. If the equity
capital of the capital company has not been paid up in full
amount, an official of the Commercial Register Office shall
update information on the subscribed equity capital at the moment
when the Commercial Register Office is notified of the payment of
the equity capital in full amount.
[16 June 2022]
73. If the equity capital of a capital company is not paid up
in full amount, the following conditions shall be applied
starting from 1 July 2023:
1) the capital company may only increase the equity capital
when all current equity capital shares (stocks) are paid up in
full amount;
2) the capital company shall calculate and pay dividends for
the fully paid-up equity capital shares (stocks);
3) only a fully paid-up equity capital share (stock) shall
give voting rights to a shareholder (stockholder);
4) a shareholder of a limited liability company may only
alienate a fully paid-up share, unless the articles of
association provide otherwise. In the case of the alienation of
an unpaid share, the alienor and the acquirer shall be liable for
the payment of the share as joint debtors.
[16 June 2022]
74. If a notice on the meeting of shareholders (stockholders)
has been sent or promulgated before 30 June 2023, the convening,
course, and minute-taking of the meeting of shareholders
(stockholders), and also the rights of shareholders
(stockholders) related to participation and voting at the meeting
of shareholders (stockholders) shall be subject to the provisions
of this Law, and, if stocks of a joint-stock company have been
admitted for trading on a regulated market, to the provisions of
the Financial Instrument Market Law which were in force on the
day of convening or promulgating the meeting of shareholders
(stockholders).
[16 June 2022]
75. Starting from 1 July 2023, registered stocks of a
joint-stock company which has been entered in the Commercial
Register before 30 June 2023 shall be considered as recorded
stocks, and bearer stocks shall be considered as dematerialised
stocks. The joint-stock shall submit the Commercial Register
Office amendments to the articles of association which provide
for the respective changes concurrently with other changes in the
articles of association, but not later than by 1 July 2026.
[16 June 2022]
76. The joint-stock shall submit the Commercial Register
Office amendments to the articles of association providing for
the deletion of the form of stocks concurrently with other
changes in the articles of association, but not later than by 1
July 2026.
[16 June 2022]
77. The reorganisation process in which the application for
the commencement of reorganisation referred to in Section 338 of
this Law and accompanying draft agreement are submitted to the
Commercial Register Office by 31 May 2023 shall be subject to the
provisions of this Law for reorganisation which were in force at
the moment the respective application was submitted.
[11 May 2023]
78. Until 30 June 2023, the notices referred to in Section
346, Paragraph three, Section 351, Paragraph two, and Section
382, Paragraph two of this Law shall be promulgated in the
official gazette Latvijas Vēstnesis. The Commercial
Register Office shall submit notices for publication within three
days (excluding weekends and public holidays) from the day of
making the entry or the day when the document is attached to the
registration file.
[11 May 2023]
79. Amendments to Section 347, Paragraph one, Clause 7 and
Section 359, Paragraph three, Clause 5 of this Law regarding the
attaching of the division of the register of stockholders to the
application, and also amendments to Section 359, Paragraph three,
Clause 6 of this Law regarding the certification issued by the
central securities depository on the recording of dematerialised
stocks shall be applicable from 1 July 2023.
[11 May 2023]
80. If a joint-stock company registered in the Commercial
Register before 30 June 2023 has not submitted the documents
referred to in Paragraph 66 of these Transitional Provisions, it
shall, starting from 1 January 2024, concurrently with the
application referred to in Section 347 of this Law for making an
entry on reorganisation, submit to the Commercial Register Office
the documents referred to in Paragraph 66 of these Transitional
Provisions.
[11 May 2023]
81. Amendments regarding the new wording of Section 291 of
this Law, and also amendments to Section 292, Paragraph one and
Section 294, Paragraph one of this Law regarding the tasks of the
supervisory board shall come into force on 1 July 2023.
[11 May 2023]
82. Amendments to Section 4.2, Paragraph one,
Section 210, Paragraph one, Section 268, Paragraph one, Section
276, Paragraph three, Section 280, Paragraph two, and Section
284, Paragraph four of this Law, and also amendment regarding the
deletion of Section 184 of this Law shall come into force on 1
July 2023.
[11 May 2023]
83. Section 4.3 of this Law, and also amendments to
Section 224, Paragraph two, Section 305, Paragraph two, and
Section 319, Paragraph four of this Law regarding the
restrictions on commercial activities imposed on a natural person
in a Member State shall enter into force on 1 August 2023.
[11 May 2023]
84. Amendments to Section 236.1, Paragraph two of
this Law regarding deletion of the word "registration", Section
236.2, Paragraph three, Clause 4 of this Law regarding
the replacement of the word "two" with the words "this
Paragraph", title and text of Section 238.1 of this
Law regarding replacement of the word "registered" with the word
"recorded", and deletion of the second and third sentences of
Section 238.2, Paragraph two of this Law shall come
into force on 1 July 2023.
[11 May 2023]
85. The amendment to Section 354.1 of this Law
adopted on 16 June 2022 regarding the new wording of its
Paragraph one, deletion of Paragraph two, deletion of the words
"or, in case of bearer stocks, from the day of publishing the
notice" in the second sentence of Clause 5 of Paragraph three,
and the new wording of Paragraph four, and also the amendments to
Paragraph one of Section 378 by which the words "registered
stocks" are replaced with the words "recorded stocks" shall be
deleted (Sections 62 and 63 of the law Amendments to the
Commercial Law adopted on 16 June 2022).
[11 May 2023]
Informative
Reference to Directives of the European Union
[6 July 2021; 11 May 2023; 16
June 2022]
This Law contains norms arising from:
1) Council Directive 86/653/EEC of 18 December 1986 on the
coordination of the laws of the Member States relating to
self-employed commercial agents;
2) Directive 2009/102/EC of the European Parliament and of the
Council of 16 September 2009 in the area of company law on
single-member private limited liability companies;
3) Directive (EU) 2017/1132 of the European Parliament and of
the Council of 14 June 2017 relating to certain aspects of
company law;
4) Directive (EU) 2019/1151 of the European Parliament and of
the Council of 20 June 2019 amending Directive (EU) 2017/1132 as
regards the use of digital tools and processes in company
law;
5) Directive (EU) 2019/1023 of the European Parliament and of
the Council 20 June 2019 on preventive restructuring frameworks,
on discharge of debt and disqualifications, and on measures to
increase the efficiency of procedures concerning restructuring,
insolvency and discharge of debt, and amending Directive (EU)
2017/1132 (Directive on restructuring and insolvency);
6) Directive 2007/36/EC of the European Parliament and of the
Council of 11 July 2007 on the exercise of certain rights of
shareholders in listed companies;
7) Directive (EU) 2019/2121 of the European Parliament and of
the Council of 27 November 2019 amending Directive (EU) 2017/1132
as regards cross-border conversions, mergers and divisions.
President V. Vīķe-Freiberga
Riga, 4 May 2000
1The Parliament of the Republic of
Latvia
Translation © 2024 Valsts valodas centrs (State
Language Centre)
