Commercial Law

Note: Present Act is shown here just for your general information and does not pretend for any accuracy, exactness or completeness. Printing mistakes are possible.

(last changed 22 Dec 2006)

Part one.

GENERAL PART

Chapter one.

GENERAL PROVISIONS

Art. 1 (1)  For the purposes of this Act a merchant shall mean any individual or corporate body engaged by occupation in any of the following transactions:

1. purchasing goods or other chattels for the purpose of reselling them in their original, processed or finished form;

2. sale of one's own manufactured goods;

3. purchasing securities for the purpose of reselling them;

4. commercial agency and brokerage;

5. commission, forwarding and transportation transactions;

6. insurance transactions;

7. banking and foreign-exchange transactions;

8. bills of exchange, promissory notes and cheques;

9. warehousing transactions;

10. licence transactions;

11. supervision of goods;

12. transactions in intellectual property;

13. hotel operation, tourist, advertising, information, entertainment, impresario and other services;

14. purchase, construction or furnishing of real property for the purpose of sale;

15. leasing.

(2) Merchants are:

1. the companies;

2. the cooperatives, except housing cooperatives.

(3) Any person which has established a business, which in accordance with its purposes and volume requires that its activities be conducted on a commercial basis even if not listed under paragraph 1, shall also be deemed a merchant.

Art. 2 The following shall not be deemed merchants:

1. natural persons engaged in farming;

2. artisans, persons providing services through their own labour or members of the professions, except where their activity may be defined as a business within the meaning of Art. 1, paragraph 3;

3. persons providing hotel services by letting rooms in their own home.

Chapter two.

COMMERCIAL REGISTER

Art. 3 (1)Each district court shall keep a commercial register in which it shall register all merchants and all other relevant circumstances pursuant to this Act. For each merchant a separate case shall be established and kept.

(2) Other registers for individual types of merchants may be kept by virtue of a law.

Art. 4 (1) Every merchant must apply for registration in the commercial register by declaring the circumstances established by the preceding article.

(2)  The circumstances subject to registration shall be declared on the name of the merchant through a person or persons who represent the merchant ex lege, and in provided by the law cases – also on behalf of another person. In case of change in the bodies or in the representation the application for entry shall be performed by the newly elected body or representative.

(3) Any person under an obligation to apply for registration, or respectively to present the documents or signatures provided for in this Act, shall do so within seven days of the occurrence of the circumstance, unless the law provides otherwise.

Article 4a. The third persons can refer to all circumstances subject to entry, although the entry may not have been made yet, unless a law explicitly stipulates an activity after the entry.

Art. 5. Everyone shall be free to inspect the commercial register and the documents pursuant to which the entries have been made, as well as to obtain copies thereof.

Art. 6 (1) The court shall publish the registrations made in the commercial register in the State Gazette when required by law.

(2)  Before the elapse of 15 days after the promulgation of the registered circumstance, it cannot be opposed to third persons who prove that was impossible to learn it.

Chapter three.

TRADE NAME AND SEAT

Art. 7 (1) A trade name shall be the name under which a merchant shall carry on its business and under which it shall sign.

(2) In addition to the necessary content established by law, a trade name may also denote the purposes of a business, the names of the partners, and a freely chosen extension. A trade name must correspond to the truth, must not deceive, and must not be offensive to public order and morals.

(3) The merchant shall mandatorily inscribe its trade name in Bulgarian. It may additionally inscribe it in a foreign language.

Art. 8 The trade name of a branch shall incorporate the trade name of the merchant and the extension "branch".

Art. 9  The trade name of a merchant which has been declared in liquidation shall carry the extension "in liquidation", and upon declaration of bankruptcy - "in bankruptcy".

Art. 10 (1) A trade name may be changed upon an application by the merchant which has registered it.

(2) Should a trade name contain the name of a retiring partner, it may be preserved only with that partner's consent.

Art. 11(1) A trade name may be used only by the merchant which has registered it.

(2) In case of use of another's trade name the interested parties shall be free to seek an injunction, as well as damages for such use.

Art. 12 (1) A merchant's seat shall be the community where its registered office is located.

(2) A merchant's address shall be the address of its registered office.

Art. 13 (1) A merchant shall provide the following data on all his commercial correspondence and his Internet site if available: trade name; seat and registered office; the unified identification code and bank account. A merchant may also provide a forwarding address. Whereas a trade company shall point out the amount of their capital, they shall also point out the part of which has been paid in.

(2) The trade correspondence of the branch shall indicate the data of the merchant under para 1.

Art. 14. (1) Any relocation of a merchant's office to another community shall be declared for entry in the commercial register.

(2) (rep.)

(3) (rep.)

(4) (rep.)

Chapter four.

ENTERPRISES AND TRANSACTIONS WITH THEM

Art. 15 (1) An enterprise as a set of rights, obligations and factual relations shall be transferable by a transaction in writing with the signatures attested by a notary public. The transferor shall advise all creditors and debtors of the effected transfer.

(2)  When the whole enterprise of a trade company is transferred a decision taken pursuant to art. 262p shall be required.

(3) Absent another agreement with the creditors, upon the transfer of an enterprise the transferor shall be liable jointly and severally with the transferee up to the size of the obtained rights. Creditors of recoverable liabilities shall first address the transferor.

Art. 16 (1) The transfer of an enterprise shall be registered in the commercial register both in the file of the transferor and the transferee.

(2) (rep.)

(3) (rep.)

(4) Should the contract transfer real property or another interest therein, the contract shall be registered with the recordation office as well.

Art. 16a. (1) The transferee shall manage independently the trade company transferred to him for a period of 6 months from the date of promulgation of the transfer.

(2) Within the period under para 1 every creditor of the transferor or the transferee, whose receivable has not been secured and has occurred before the date of the entry of the transfer, may require execution or security in compliance with his rights. If the request is not satisfied the creditor shall have the right to preferential satisfaction of the rights having had belonged to his debtor.

(3) The members of the managing body of the transferee shall be jointly and severally responsible before the creditors for the individual management.

Chapter five. BRANCHES

Art. 17

(1) A merchant may open a branch outside the community where its seat is located.

(2) The branch shall be registered in the commercial register on the grounds of a written application containing:

1. seat and subject of activity of the branch;

2. data for the person managing the branch and for the extent of his representative authority.

(3) Attached to the application under para 2 shall also be a notary certified consent along with a specimen of the signature of the person managing the branch.

Art. 17a.  (1) A branch of a foreign person, registered with the right of performing trade activity under the national legislation, shall be entered in the commercial register.

(2) Besides the data under Art. 17 Para 2, the application for entry shall contain data about:

1. the legal form and the firm or the name of the foreign person, as well as the firm or the branch if it is different than this of the foreign person;

2. the register and the number of entry, under which the foreign person is registered, if the applicable law provides so;

3. the law of the state, applicable to the foreign person if it is not the law of a Member State of the European Union.

4. the persons, who shall represent the foreign person as per the register, where it is registered, if such register exists, the manner of representation as well as the liquidators and the receivers and their powers.

(3) The following data shall be entered in the register:

1. under Para 2, as well as each change in it, including closing of the branch;

2. about termination of the foreign person, initiation of liquidation, continuing of activity, termination and finalization of the liquidation;

3. from all the acts of the insolvency-court, which ate subject of entry in the register where the foreign person is registered, as well as the decisions under Art. 759, Para 1 and Art. 760, Para 3 if such exist;

4. about the deletion of the foreign person.

(4) At the register shall be submitted a copy of:

1. the act of establishment, agreement or articles of association of the foreign person, which contains all amendments and supplementations, including after the inscription of the branch;

2. each annual financial report of the foreign person, after being registered or presented as per legislation of the state where it is registered.

Art. 18 The rules pertaining to a merchant shall apply mutatis mutandis to the seat and registered office of a branch and its relocation.

Art. 19 A branch shall keep its account books as an independent merchant, without preparing a separate balance sheet. The branch of a legal person which is not a merchant within the meaning of this Act and the branch of a foreign person shall further prepare a balance sheet.

Art. 20 Actions based on disputes arising from a direct relationship with a branch may be brought against the merchant at the seat of the branch as well.

Chapter six.

AGENCY

Art. 21 (1) A procurator shall be a natural person commissioned and authorized by a merchant to manage its firm for compensation. Such authority may be given to more than one person for either a separate or joint exercising of the procuration. The signatures on the procurator's mandate (procuration) shall be notarized and it shall be submitted by the merchant for registration in the commercial register together with a specimen signature of the procurator.

(2) A procurator shall sign by adding his own name to the merchant's trade name and an extension indicating the procuration.

Art. 22 (1) A procurator shall be entitled to perform or effect any acts or transactions related to the carrying on of the business activities, to represent the merchant, and to authorize third parties to perform specific acts. He may not authorize third parties with those of his powers which are derived by operation of law.

(2) A procurator may not alienate or encumber any real property of the merchant except when expressly authorized to do so. The authorization may be restricted to the business of a single branch. No other restrictions shall be binding upon third parties.

Art. 23 The relationship between a merchant and a procurator shall be governed by an agreement.

Art. 24 An authorization shall be binding upon third parties only after being registered in the commercial register.

Art. 25 (1) An authorization shall be terminated upon withdrawal by the merchant, and the registration of such withdrawal in the commercial register.

(2) An authorization shall not be terminated by virtue of a merchant's death or placing under judicial disability.

Art. 26 (1) An agent shall be a person authorized by a merchant to perform, for compensation, the acts set forth in the mandate. Absent any other instructions, an agent shall be deemed authorized to perform all acts related to the merchant's usual business. The authorization shall be made in writing and the signature shall be notarized.

(2) An agent shall need express authorization to alienate or encumber real property, to accept bills of exchange, to obtain a loan, or to engage in litigation. Any other restrictions on its mandate shall be binding upon a third party only if that party new or ought to have known of such restrictions.

(3) An agent may not transfer its powers to a third party without the merchant's consent.

(4) An agent shall sign by adding its own name to the trade name and an extension indicating the agency.

Art. 27 The relationship between a merchant and an agent shall be governed by an agreement.

Art. 28 The authorization of an agent shall be terminated in accordance with the provisions of civil law.

Art. 29 (1) A procurator or agent may not, without the merchant's consent, effect commercial transactions either on their own behalf or on the behalf of a third party within the framework of their authorization. Consent shall be deemed given if at the time of authorization the merchant knew of the carrying on of such activities and their termination was not agreed upon expressly.

(2) In case of a breach of the obligations set forth in the preceding paragraph the merchant shall be entitled to seek damages or to state that the transactions effected by the authorized persons have been effected on its behalf. The statement shall be made in writing not later than one month of its becoming aware of the transaction, but not later than one year of the effecting of the transaction, and shall be addressed to the procurator or agent and to the third party.

(3) Actions pursuant to paragraph 2 shall expire by limitation after five years from the date the transaction was effected.

Art. 30 (1) The relationship between a merchant and its assistant shall be governed by a contract.

(2) A shop assistant may not effect transactions on the merchant's behalf. When working in a generally accessible sales area, a shop assistant shall be deemed authorized to effect the transactions which are usually effected in such an area.

Art. 31 A shop assistant may not engage in any commercial activity independently or on the behalf of third parties in competition with his employer, except with the latter's express consent.

Section II.

Sales Representative

Art. 32 (1) A sales representative shall be a person engaged independently and by occupation in assisting the business of another merchant. A sales representative may be authorized to effect transactions in the name of the merchant, or in its own name but on the behalf of the merchant.

(2) The contract between the merchant and the sales representative shall be executed in writing. The merchant may not refer against the representative to agreements in deviation from the provisions of art. 33, 34, art. 36, para 4 and 5 and art. 45 which are to the representative’s prejudice.

Art. 33 (1) A sales representative shall cooperate or effect transactions with due care, taking into consideration the merchant's interests. It shall forthwith notify the merchant of any transaction effected by it.

(2)  The sales representative shall be obliged to fulfil the instructions of the merchant as well as to provide the full information at his disposition regarding his activities.

Art. 34 (1) A merchant shall provide the sales representative with all relevant information and documents concerning the conclusion and performance of the assigned deals.

(2) A merchant shall forthwith notify the sales representative whether he accepts a transaction effected without authorization as well as whether he has concluded a deal prepared by him.

(3)  A merchant shall be obliged to provide the sales representative with the information necessary for implementing his activities including possible considerable reduction of the volume of the concluded deals compared to the anticipated.

Art. 35 A sales representative which undertakes to be personally liable for the performance of obligations under effected transactions shall be entitled to an additional commission which shall be agreed upon in writing. The parties may not agree in advance that no such commission shall be owed.

Art. 36 (1)  A sales representative shall be entitled to a commission for all transactions effected by him, through his assistance or with clients attracted by him for concluding the respective type of deals during the term of his contract with the merchant. Commission shall be paid also for transactions prepared by him but not concluded unless due to reasons that cannot be blamed on the merchant.

(2) Where a sales representative is entrusted with a specified territory or circle of clients, it shall also be entitled to a commission for all transactions concluded without its assistance, but with persons from the same territory or with the same clientele.

(3) A sales representative shall be entitled to a commission for any of the merchant's claims which it has collected.

(4)  The merchant shall be obliged to provide the sales representative with the information necessary to calculate the payable commission within the period referred to in art. 38.

(5) Either party shall be entitled to request from the other abstracts from the account books concerning the transactions concluded on the basis of the agency agreement, including those necessary for verification of the determined commission.

Art. 37 Where the commission has not been agreed upon, it shall be deemed to amount to the customary rate paid for the specific activities. In case the customary rate cannot be established, the commission shall be determined by the court for reasons of justice.

Art. 38  A sales representative's commission shall be paid on a monthly basis. Other period for payment of the commission may be agreed in the contract but not longer than the end of the month following the quarter the respective deal was concluded or intended to be concluded.

Art. 39 A sales representative shall be entitled to reimbursement for the customary expenses related to its activities, unless the agreement provides otherwise.

Art. 40 (1) A sales representative, respectively his heirs upon his death, shall be entitled to a lump-sum compensation upon termination of the agreement, when the merchant continues to enjoy benefits from the clientele established by the sales representative or the last has considerably increased the volume of deals concluded with it. The right of such compensation shall be determined regarding all circumstances including presence or lack of restrictive commercial clauses.

(2) The compensation shall be equal to the sales representative's average annual commission for the entire duration of its agreement but for no more than the last 5 years.

(3) The compensation referred to in para 2 shall not be due when:

1. more than a year has expired after termination of the contract without written notification by the sales representative of the merchant demanding the due compensation;

2. agreement was avoided through the sales representative's fault or was terminated unilaterally by the sales representative as referred to in art. 47, para 1 or 2 unless for the reason of his permanent disability or age;

3. the sales representative has transferred the legal relationship to another person even with consent of the merchant.

(4) Upon termination of the agreement the sales representative may claim compensation for already concluded contracts or contracts prepared for conclusion by him.

(5) The sales representative shall not have the right of commission referred to in art. 36 if in the case of para 4 it shall be due to a previous sales representative unless according to the circumstances the commission shall be divided between both of them.

Art. 41 (1) Any restrictions on the activities of a sales representative subsequent to the termination of the agreement shall be agreed upon in writing.

(2) Restrictions must encompass the same territory and type of goods or services as the agency agreement. They may not be for more than two years following the termination of the contract. The merchant shall owe a respective compensation for the period of restriction.

(3) Should a sales representative declare the agreement avoided through a fault of the merchant, the sales representative shall be free to discharge itself from the said restrictions not later than one month from the date of the avoidance.

Art. 42. Even when not authorized to conclude contracts a sales representative may accept acts performed by third parties to protect their rights against imperfect performance by the merchant. A sales representative may act to secure evidence in name of the merchant. Any restriction on these rights shall be binding upon third parties only if they knew or ought to have known of the said restriction.

Art. 43 Should a sales representative conclude contracts without authorization, and the third party did not know of that fact, the contract shall be deemed ratified by the merchant if the merchant fails to reject it upon being notified of it by the sales representative or the third party and inform them correspondingly.

Art. 44 A sales representative may represent several merchants as long as they are not in competition among themselves. It may reach agreement with a merchant to be its exclusive sales representative.

Art. 45 The subject and territory of a sales representative shall be determined by the agency agreement.

Art. 46 (1) The internal relationship between the sales representative and the merchant shall be governed by the agreement between them. Absent any other provision, a sales representative shall arrange for its own premises. If the compensation is not indicated in the agreement, the customary compensation for the type of representation shall be due.

(2) Representation under the preceding paragraph may not be delegated to another party in the same territory.

(3) A sales representative shall indicate in the documents issued by it and on its commercial correspondence the information required under Art. 13.

Art. 47 (1) Where the sales representation agreement has been concluded for an indefinite term, during the first year following the date of conclusion each of the parties may terminate it with a monthly notice, during the second year, with a two months' notice, and, after the second year, with a three months’ notice, where the parties may not agree on shorter terms. When a longer term of notice was agreed it shall be equal for both of the parties. If not otherwise agreed, the termination of the contract shall enter in effect from the end of the calendar month when the term of the notice has expired.

(2) An agreement which has been concluded for a definite period may be terminated before its expiration if the party wishing to terminate it compensates the other party for the damages caused.

(3) The rights of the sales representative under Art. 40 may not be prejudiced by the termination pursuant to paragraphs 1 and 2.

(4)  If upon expiration of the term of the contract for sales representation both of the parties continue to fulfil their obligations, it shall be deemed extended to unlimited duration. In such case at determining the term of notice referred to in para 1, the duration of the contract before expiration of its term shall be taken into consideration.

(5) A sales representative which has ceased its activities shall apply, within the time period set forth in Art. 4, for deletion of its registration in the commercial register.

(6) Should a representation be terminated by reasons of death or placing under disability of the sales representative, the heirs or, respectively, the guardian, and in case of bankruptcy the respective court, shall request deletion from the commercial register.

Art. 48 The provisions of articles 32 to 47 shall not apply to persons engaged as representatives or brokers in stock exchange transactions, or as representatives of persons engaged in auction operations.

Section III.

Broker

Art. 49 (1) A broker shall be a merchant which by occupation acts as an intermediary so that transactions may be entered into.

(2) As far as brokerage for contracts for the carriage of goods by sea and for stock exchange transactions are concerned, the provisions for the said activities shall apply even when the brokerage is performed by a mercantile broker.

Art. 50 (1) A broker shall keep a journal in which it shall record on a daily basis all executed contracts. At the end of each day the broker shall date and undersign all entries for that day.

(2) Contracts shall be recorded consecutively in the order of their execution; an entry shall include the names of the contracting parties, the time of execution of the contract and the essential arrangements.

(3) A broker must, upon request, provide the parties with an abstract from its journal containing the full entry concerning their contract.

Art. 51 A broker shall be entitled to a commission from one or both parties in accordance with the arrangement reached. Absent such an arrangement, the customary brokerage for the type of transaction in the specific circumstances shall be owed by both parties.

Section IV.

Trade Secrets

Art. 52 In carrying on their activities a procurator, an agent, a shop assistant, a sales representative and a broker must protect the trade secrets of the persons which have commissioned them to perform certain acts, as well as their good name as merchants.

Chapter seven.

ACCOUNT BOOKS

Art. 53 (1) A merchant shall keep accounts in which it shall record the movements of its enterprise's property. Such movements shall be recorded in chronological order.

(2) A merchant shall, through inventory performed within the time periods prescribed by the Accountancy Act, establish the availability and value of the items of the assets and liabilities of its enterprise's property.

(3)A merchant shall sum up the results of its commercial activities on the basis of the entries in its books and inventory, and prepare an annual financial statement and, where necessary, the relevant accounting notes. The annual financial statement shall be verified by a certified public accountant in the provided by law cases.

Art. 54 The opening balance sheet for each year shall correspond to the closing balance sheet for the preceding year. A balance sheet shall also be prepared when a merchant winds up its activities.

Art. 55 (1) Regularly kept account books and entries therein shall be admissible as evidence between merchants for establishing commercial transactions.

(2) Account books kept in violation of the provisions of this Act or the Accountancy Act shall be inadmissible as evidence in favour of the party whose duty it is to keep them.

Part two.

TYPES OF MERCHANTS

Division one.

SOLE ENTREPRENEUR

Chapter eight.

NATURAL PERSON MERCHANT

Art. 56 Any natural person possessing capacity whose domicile is in the country may register as a sole entrepreneur.

Art. 57 Ineligible to be a sole entrepreneur shall be a person:

1. who is bankrupt and his rights have not been restored;

2. who has intentionally gone bankrupt and has left unsatisfied creditors.

3. who has been convicted for bankruptcy.

Art. 58 (1) A sole entrepreneur shall be registered on the basis of an application which shall state:

1. the name, domicile, address and Unified Civil Code (EGN);

2. the trade name under which the activities shall be carried on;

3. the seat and the address of the registered office;

4. the purposes of the business.

(2) A specimen of the merchant's signature and an affidavit stating that the person has not been deprived of the right to carry on commercial activities shall be attached to the application.

(3) Entered in the register shall be the data of para 1.

(4) A person may register only one trade name as a sole entrepreneur.

Art. 59 A sole entrepreneur's trade name shall incorporate without abbreviation the person's given name and either the surname or patronymic by which he is generally known.

Art. 60 (1) A sole entrepreneur's trade name may be transferred to a third party only together with his enterprise. The consent to transfer a trade name shall be given in accordance with Art. 15, paragraph 1.

(2) A sole entrepreneur's heirs, on acquiring the enterprise, shall be free to retain its trade name.

(3) In cases under the preceding paragraphs the new owner's name shall be added to the trade name.

(4) The transfer shall be registered in the commercial register.

Art. 60a. The entry of the sole entrepreneur shall be deleted from the commercial register:

1. in case of termination of his activity or establishing his residence abroad - upon his application;

2. in case of his death - upon application by the successors;

3. for placing under judicial disability – upon application by the guardian or trustee.

Division two.

STATE - OWNED AND MUNICIPAL ENTERPRISES

Chapter nine.

PUBLIC ENTERPRISE MERCHANT

Art. 61 A state-owned and municipal enterprise shall be either a single person limited liability company or a single person joint stock company. State-owned and municipal enterprises may also form other companies or groups of companies.

Art. 62 (1) State-owned enterprises shall be formed as or transformed into single person limited liability companies or single person joint stock companies pursuant to a procedure to be established by a law.

(2) Municipal enterprises shall be formed as or transformed into single person limited liability companies or single person joint stock companies through a resolution of the municipal council.

(3) State-owned enterprises which are not companies may be formed with a law.

Division three.

COMPANIES

Chapter ten.

GENERAL PROVISIONS

Art. 63 (1) A company is an association of two or more persons for effecting commercial transactions with joint means.

(2) In cases provided by a law a company may be incorporated by one person.

(3) Companies shall be legal persons.

Art. 64 (1) The types of companies are:

1. general partnership;

2. limited partnership;

3. limited liability company;

4. joint stock company;

5. partnership limited by shares.

(2) Only the companies set forth in this Act may be established.

(3)  The trade companies under para 1, item 1 and 2 shall be personal, and those under item 3 - 5 - capital.

(4) A law may stipulate that an activity may be carried out only by a certain kind of trade companies.

Art. 65 (1) A company's founders shall be Bulgarian or foreign individual or corporate bodies possessing capacity.

(2) A person may participate in one or more companies to the extent such participation is not prohibited by law.

(3) When a trade company participates in another company its rights as a partner or sole owner shall be exercised by the person who has the right to represent it or by an explicitly authorised person.

Art. 66 Persons wishing to form a company may reach agreement on the acts which must be performed so that the incorporation may be prepared. For a breach of obligations based on that agreement the parties shall be liable only for the actual damages caused.

Art. 67 A company shall be deemed formed on the date of its registration in the commercial register. The application for registration shall be filed by the appointed managing organ.

Art. 68 The will of the parties and the objective of the interpreted provision shall be taken into account when interpreting the statutes.

Art. 69 (1) Any acts by the founders performed in the name of the as yet unincorporated company prior to the date of its registration shall create rights and obligations for the persons who have carried out the said acts. When transactions are effected it shall mandatorily be noted that incorporation is pending. The persons who have effected the transactions shall be liable jointly and severally for undertaken obligations.

(2) When the transaction has been effected by the founders or a person authorized by them, the rights and obligations shall be transferred ex lege to the incorporated company.

Art. 70 (1) The constitution of the company shall be void only when one of the following offences has been admitted:

1. there is no constituent contract or it has not been worked out in the form stipulated by the law;

2. for joint-stock or a limited joint-stock company with stocks the requirements of art. 159 and 163 have not been met;

3. (rep.)

4. the subject of activity of the company contradicts the law or the good ethics;

5. the constituent contract or the statutes do not contain the company, the subject of activity of the company or the size of the instalments, as well as the capital when the law so requires;

6. the part of the capital stipulated by the law has not been installed;

7. less able persons than the number stipulated by the law have participated in the constituting of the company.

(2) Any interested party, as well as the public prosecutor, may request from the district court at the seat of the company that the company be declared void within a period of one year after the institution of the company. In the cases under para 1, item 3, 4, 5 and 6 the court shall declare the company void only if the offence has not already been repealed or it has not been repealed within a suitable term defined by the court.

(3) The court's ruling to declare the company void shall be effective from the date of entry into force. As of that moment the company shall be deemed terminated and the court shall send the decision for entering into the commercial register, after which liquidation shall be carried out by a liquidator appointed by the official for registration at the Registry Agency.

(4) (rep.)

(5) Where acts in the name of the company declared void have been carried out, the founders shall be liable jointly and severally and their liability shall be unlimited.

(6) Article 498 of the Civil Procedure Code shall not apply regarding the constitution of a trade company.

Art. 71 Any partner in a company may bring an action to the district court of the company's seat to protect its right to be a partner and its individual rights as a partner, when these have been violated by the company's organs.

Art. 72 (1) Should a partner or, respectively, a shareholder, make a non-monetary contribution, the articles or, respectively the statutes, shall state the name of the contributor, a full description of the non-monetary contribution, its monetary value, and the grounds for the contributor's rights.

(2) The contribution in a limited liability company, a joint stock company or a partnership limited by shares shall be valued by three independent experts appointed by the official for registration at the Registry Agency. The conclusion of the experts must contain full description of the non-pecuniary instalment, the method of assessment, the obtained assessment and its compliance with the size of the share of the capital or of the number, the nominal and the issued value of the stocks registered by the contributor. The conclusion shall be presented to the commercial register with the application for entry.

(3) The assessment in the corporate contract, respectively in the statutes, cannot be higher than the one given by the experts.

(4) Should the contributor not agree with the valuation, it may participate in the company with a monetary contribution or withdraw from participation in the company.

(5) The contribution may not have as a subject future labour or services.

Art. 73 (1) The contribution of a right for the creation or transfer of which a notarial form is required shall be effected with the articles. For contributions to a joint stock company the consent in writing of the contributor and a description of the contribution with a notarized signature shall be attached to the statutes.

(2) The contribution of any other rights shall be made pursuant to the form the law provides for their creation or transfer.

(3) The contribution of a claim shall be made with the articles or, respectively, the statutes, and the contributor shall attach evidence of having notified the debtor of the transfer of the claim. The requirement for notification shall not apply when the taking regards the company itself.

(4) Title to a contribution shall be acquired from the moment of the company's formation.

(5) Where a contribution has as a subject a real right over real property, the respective organ of the company shall, after such right has arisen, present an abstract of the articles, certified by a recordation judge, for recording in the recordation office and, whenever necessary, separately the contributor's consent as well. Such organ shall present an abstract of the statutes certified by a recordation judge and the contributor's consent. In making the recording the recordation judge shall ascertain the contributor's rights.

Art. 73a. The obligation of the partners of the limited liability company and of the stock holders for instalments in the capital cannot be remitted, except in its reduction, neither can it be deducted.

Art. 73b. (1) When a joint stock company, within 2 years from its constitution acquires rights at a price exceeding 10 percent of the capital from a person who has registered stocks at the time of constitution of the company, decision for it shall be taken by the general assembly of the stock holders and art. 72, para 2 shall apply for the transferred rights.

(2) The transaction shall be valid upon the entry of the decision of the general assembly in the commercial register.

(3) Para 1 and 2 shall not apply for rights acquired in the process of the usual activity of the company, at the stock exchange or under supervision of an administrative or court body.

Art. 73c.  Payments to partners and stock-holders ensuing from shares and stocks of a trade company, pledged or distrained, shall be made if the creditor does not object, by a pledge or distraint, within one month upon a written notice. In case of an objection the due sum shall be deposited in a bank for securing the creditor.

Art. 74 (1) Every partner or shareholder may bring an action before the district court of the company's seat for the repeal of a resolution of the general meeting when such resolution is inconsistent with a mandatory provision of the law or with the articles or, respectively, the statutes of the company. The action shall be brought against the company.

(2) The action shall be brought within 14 days of the date of the meeting when the plaintiff was present or was duly notified, or otherwise within 14 days of learning of the resolution, but not later than three months after the date of the general meeting.

(3) A partner or shareholder may intervene in a proceeding in accordance with the provisions of the Code of Civil Procedure. It may carry on the proceedings even after the withdrawal of the original plaintiff.

Art. 75 (1) The instructions given by the court in repealing a general meeting resolution concerning the interpretation of the law, the memorandum of association or the statutes shall be binding on the general meeting whenever it discusses the same issue again.

(2) Resolutions or acts by the company's organs which are in contravention of an effective court ruling are null and void. Each partner or shareholder may at any moment refer to such nullity or request its proclamation by the court.

Chapter eleven.

GENERAL PARTNERSHIP

Section I.

General Provisions

Art. 76 A general partnership shall be a company formed by two or more persons for the purpose of effecting commercial transactions by occupation under a joint trade name. The partners shall be liable jointly and severally and their liability shall be unlimited.

Art. 77 The trade name of a partnership shall consist of the surnames or trade names of one or more of the partners with the extension "sabiratelno druzhestvo" (general partnership) or "sadruzhie" ("s-ie") (partners).

Art. 78 A partnership's articles shall be drawn up in writing with notarized signatures of the partners and shall state:

1. the name and domicile or, respectively, the trade names, seat and the unified identification code, as well as the address of each partner;

2. the trade name, the seat, the address of management and the purposes of the partnership;

3. the type and amount of each partner's contribution and the valuation thereof;

4. the manner of distribution of profits and losses among the partners;

5. the manner of management and representation of the partnership.

Art. 79 (1) The application for registration of the general partnership in the commercial register shall be signed by all partners and the articles of partnership shall be attached to it.

(2) Registered in the register shall be the information under items 1, 2 and 5 of the preceding Art..

(3) The persons authorized by the articles of partnership to represent the partnership shall submit specimen signatures.

Section II.

Partners' Relationships

Art. 80 The partners' legal relationships shall be governed by this Section, unless the articles of partnership provide otherwise, with the exception of the provision of Art. 87.

Art. 81 (1) A partner shall be entitled to reimbursement for necessary expenses incurred in the course of the partnership's business and to compensation for damages suffered in connection with such business.

(2) The partnership shall pay the interest as set by law on such expenses incurred or damages suffered by a partner.

Art. 82 A partner which is in arrears in paying its monetary contributions or receives or, respectively, takes partnership money for itself without being entitled to do so, shall owe the partnership the repayment of all such moneys and the interest as set by law. Should the damages for the partnership be greater, the partnership may seek compensation for the balance.

Art. 83 (1) A partner may participate in another company or enter into transactions related to the purposes for which the partnership was set up, on its own account or on account of a third party, only with the consent of the other partners.

(2) In case of a violation of paragraph 1 the partnership may request compensation for the damages suffered or state that it shall assume the rights and obligations under the concluded transactions. The statement must be made in writing within one month of acquiring knowledge of the transaction, but not later than one year of its conclusion, and be forwarded to the partner and the third party.

(3) The right to an action pursuant to the preceding paragraph shall expire after three months from the date of the partners' becoming aware of the said act, or after three years of the commitment of the said acts when the partners have no knowledge of them.

Art. 84 (1) Each partner shall be entitled to take part in the management of the partnership's business, except when management has been assigned with the articles of partnership to one or several of the partners or to a third party.

(2) The consent of all partners shall be required for the acquisition or disposal of real rights over real property, for the appointment of a manager who is not a partner, or for executing an agreement for a cash loan exceeding a sum fixed in the articles of partnership.

Art. 85 The resolution to assign the management to one or several partners may be revoked by the district court of the partnership's seat upon an action brought by some of the partners, if the managers have committed a breach of their obligations, as well as on other grounds provided for in the articles of partnership. The ruling shall be officially sent to the Registry Agency for entering into the commercial register.

Art. 86 A partner which does not participate directly in the management shall be entitled to obtain information on the partnership's business, to inspect the books, the partnership and other papers, and to ask for explanations from the managers.

Art. 87 Where the articles of partnership require that resolutions be adopted with a majority vote, each partner shall be entitled to one vote. Resolutions shall be recorded in the minutes book.

Section III.

Partners' Relationship With Third Parties

Art. 88  When bringing an action against the partnership the plaintiff may also name as defendants one or several of the partners. Forcible execution shall be directed first against the partnership, and, in case of impossibility for satisfaction, against the partners.

Art. 89 (1) Each partner shall represent the partnership, unless the articles of partnership provide otherwise.

(2) A limitation upon the representative powers of a partner shall not be binding upon bona fide third parties if it is not registered in the commercial register.

Art. 90 The representative powers of a partner may be revoked pursuant to Art. 85.

Art. 91 A partner may, in addition to the partnership's pleas, make its personal pleas before the partnership's creditors.

Art. 92 The liability for all of the partnership's debts of a newly admitted partner in an existing partnership shall equal that of the other partners.

Section IV. Dissolution of a Partnership and Termination of a Partners' Participation Grounds for Dissolution

Art. 93 A general partnership shall be dissolved upon:

1. expiration of its term or under other circumstances provided in the articles of partnership;

2. the agreement of the partners;

3. declaring the partnership bankrupt;

4. where there is no other provision, death or the placing under judicial disability of a partner or dissolution of a partner which is a legal person;

5. request of the trustee in bankruptcy in case of bankruptcy of a partner;

6. notice of termination from a partner;

7. a court ruling in the cases established by law.

Art. 94 Where a partnership has been formed for an indefinite period of time each partner may request its dissolution by sending at least six months prior notice in writing to all remaining partners, unless the articles of partnership provide otherwise.

Art. 95 (1) The district court may dissolve a partnership upon an action brought by a partner when another partner has deliberately or in gross negligence omitted to perform an obligation of its under the articles of partnership or the performance of the obligation has become impossible. This rule shall also apply whenever a partner acts against the interests of the partnership.

(2) Upon an action brought by a partner the court may, instead of dissolving the partnership, dismiss the partner which is at fault.

Art. 96 (1) The creditor of a partner which in the course of six months cannot be satisfied by forcible execution upon the debtor's personal property may attach that partner's liquidation share and request the dissolution of the partnership upon a notice in writing pursuant to the procedure set forth in Art. 94.

(2) A partnership shall not be dissolved in case the partnership or the remaining partners repay the debt following the attachment pursuant to the preceding paragraph. In this case only the participation of the debtor partner shall be terminated, unless the partners decide otherwise.

Art. 97 (1) The partners may provide in the articles that the partnership shall continue to exist in the case of termination of the participation of a partner. In this case the remaining partners shall buy out the share of the partner which has terminated its participation, and in the case of a partner's death, those of its heirs who wish shall be admitted as partners. The heirs shall state their intent to be admitted as partners not later than three months from the date of the opening of the succession.

(2) In case the heirs do not wish to be admitted as partners, as well as in case of termination of the participation of a partner, the partnership shall pay the value of the share in the partnership's assets of the decedent or the partner which has terminated its membership, and their share in the annual profits for the period up to the death or termination of the participation.

Art. 98 (1) The right of action against a partner for obligations of the partnership shall expire by limitation after five years, except where the right of action against the partnership is subject to a shorter limitation.

(2) The limitation period shall run from the date on which the dissolution of the partnership, its transformation or the termination of the participation of the partner is registered in the commercial register.

(3) An interruption of the limitation with respect to the dissolved partnership shall also apply to those partners which were partners at the time of the dissolution.

Chapter twelve.

LIMITED PARTNERSHIP

Section I.

General Provisions Definition

Art. 99 (1) A limited partnership shall be formed with articles of partnership between two or more persons for carrying out commercial activities under a common trade name, whereby for the partnership's obligations one or more of the partners shall be liable jointly and severally and their liability shall be unlimited, and the remaining partners' liability shall not exceed the amount of the agreed upon contribution.

(2) The provisions for the general partnership shall apply mutatis mutandis to the limited partnership, to the extent this chapter does not provide otherwise.

Art. 100 The articles of partnership shall be drawn up in writing with notarized signatures of the partners.

Art. 101 (1) The company's trade name shall contain the extension "komanditno druzhestvo" (limited partnership) or the abbreviation "KD" and the name of at least one of the general partners.

(2) The names of limited partners shall not be incorporated in the trade name of a limited partnership, but in case this has occurred those partners shall be deemed to bear unlimited liability vis-à-vis the creditors of the partnership.

Art. 102 A limited partnership's articles shall state:

1. the trade name of the partnership;

2. the seat and the registered office;

3. the purposes for which the partnership is set up;

4. the names or, respectively, the trade names, the unified identification code, the addresses of the partners and the extent of their liability;

5. (rep.);

6. the type and amount of the partners' contributions;

7. the manner of distribution of profits and losses among the partners;

8. the manner of management and representation of the partnership.

Art. 103 A limited partnership shall be registered with the commercial register by the general partners, which shall file the articles of partnership and specimen signatures.

Section II.

Partners' Legal Relationships

Art. 104 The partners' legal relationships, to the extent the articles of partnership contain no provision to the contrary, shall be governed by this Section.

Art. 105 A limited partnership shall be managed and represented by the general partners. A limited partner has no right to manage the partnership and block resolutions of the general partners.

Art. 106 Should a limited partner effect transactions in the name and on behalf of the partnership without being the partnership's manager or agent it shall be personally liable, except when the partnership ratifies the transaction.

Art. 107 The rule of Art. 83 shall apply to a general partner.

Art. 108 A limited partner may inspect the partnership's books and request a transcript of its annual financial report. In case of refusal the district court shall, on the motion of such partner, order that these be placed at the disposal of the partner.

Art. 109 (1) Where a limited partner has not paid in full the stipulated contribution, such contribution shall be deducted from its share of the profits.

(2) A limited partner shall participate in losses up to the amount of the stipulated contribution. It shall not be bound to pay back any profits it has received to offset subsequent losses.

Art. 110 Where at the end of a calendar year it is established that a partnership has shown losses which affect the contributions made, no profits shall be distributed before the contributions have been restored to their stipulated amounts.

Section III.

Partners' Legal Relationships With Third Parties

Art. 111 A limited partner shall be liable towards the partnership's creditors to the extent of its stipulated contribution, even when it has not been paid in full.

Art. 112 A limited partner shall bear unlimited liability with respect to transactions entered into by it in the name of the partnership prior to its formation, or after such formation whenever the creditor did not know that it was contracting with a limited partner.

Chapter thirtyeen.

LIMITED LIABILITY COMPANY

Section I.

General Provisions Definition

Art. 113 limited liability company may be formed by one or more persons which shall be liable for the company's obligations with their contributions to the company's registered capital.

Art. 114 (1) The articles of incorporation shall be executed in writing.

(2) A partner may be represented by an agent holding a special power of attorney with notarized signature.

(3) When the limited liability company is formed by one person, a constitutive deed shall be drawn up instead of articles of incorporation.

Art. 115 The articles of incorporation shall state:

1. the trade name, the seat and address of management of the company;

2. the purposes and the time period for which the company is being set up;

3. the names or, respectively, the trade names and the unified identification code of the partners;

4. the registered capital. Where the full amount has not been paid at incorporation, the articles shall set the time periods and terms for payment. The term of final instalment of the whole size of the capital cannot be longer than two years from the registration of the company, respectively from the increase of the capital.;

5. the interests of the partners;

6. the management and manner of representation;

7. the privileges of the partners, where agreed upon;

8. other rights and obligations of the partners.

Art. 116 (1) The trade name of a company shall contain the extension "druzhestvo s ogranichena otgovornost" (limited liability company) or the abbreviation "OOD".

(2) Should all the capital be owned by one person, the trade name shall contain the extension "ednolichno OOD" (single person limited liability company)

Art. 117 (1) The registered capital of a limited liability company shall be not less than 5 000 leva. It shall consist of the interests of the company's partners, and no interest shall be smaller than 10 leva.

(2) The sum total of all interests shall be equal to the registered capital, and the value of each interest shall be a multiple of 10.

(3) The interests of the individual partners may be of unequal value.

(4) An interest may be held jointly by several persons.

Art. 118 (1) The founders shall be liable jointly and severally before the company for damages caused in the course of its formation, if they have not acted with due care.

(2) The founders shall not be entitled to remuneration for the formation of the company from the registered capital.

Art. 119 (1) For registration of a company in the commercial register it shall be necessary:

1. to file the articles of incorporation;

2. to have an appointed manager or managers;

3. each partner to have paid at least one third of its interest, but not less than10 leva;

4. at least 70 per cent of the registered capital to have been paid.

(2) The data under items 1, 2, 3, 4 (only the amount of the registered capital) and 6 of Art. 115 shall be registered in the register and published.

(3) For entering in the commercial register the implementation of activity as investment broker as well as other activities for which certain law provides accomplishment with a permission of a state body, shall be presented the corresponding license or permission.

(4) For amendment and supplement of the company contract a copy of it shall be presented at the commercial register, which shall contain all amendments and supplements, certified by the body representing the company.

Section II.

Partners' Rights and Obligations

Art. 120 (1) Each partner shall pay up or contribute its interest as provided in the articles of incorporation.

(2) (rep.)

Art. 121 (1) The failure to pay up or contribute an interest shall constitute grounds for the expulsion of a partner from the company. A partner which has failed to pay up or contribute its interest within a specified period shall owe interest at a rate determined by operation of law, and compensation for damages in excess of such interest.

(2) Where the interest cannot be paid up or contributed by the partner owing such payment or contribution, and cannot be sold to a third party, the remaining partners must pay up the balance in proportion to their interests or reduce the company's registered capital in accordance with established procedures.

Art. 122 A new partner shall be admitted by the general meeting upon an application in writing, in which it shall state that it accepts the terms of the articles of incorporation. The resolution to admit the partner shall be registered in the commercial register.

Art. 123 Each partner shall be entitled to take part in the management of the company, in the distribution of profits, to be informed of the company's affairs, to review the company's books and to liquidation proceeds.

Art. 124 The partners must pay up or contribute their interests, take part in the management of the company, provide assistance for the carrying out of its activities, as well as carry out the resolutions of the general meeting.

Art. 125 (1) The participation of a partner shall be terminated upon:

1. death or disability;

2. expulsion;

3. dissolution and liquidation, in the case of a legal person;

4. bankruptcy.

(2) A partner may terminate its participation in a company with a notice in writing made at least 3 months prior to the termination.

(3) Accounts shall be settled on the basis of the balance sheet for the last day of the month of termination of the participation.

Art. 126 (1) A partner who has not paid up or deposited his share within a period additionally determined by the general meeting, which may not be shorter than one month. The period shall be determined by a majority of more than half of the capital. The manager shall inform in writing the partner about the additional period and shall notify him about the expelling.

(2) In the case of paragraph 1 the partner shall lose its title to any contributions made.

(3) A partner may be expelled by the general meeting following a notice in writing where it:

1. fails to perform its obligations for providing assistance for the carrying out of the activities of the company;

2. fails to abide by resolutions of the general meeting;

3. acts against the interests of the company.

4. for failure to pay up an additional monetary instalment, if the partner has not exercised his right to leave according to art. 134, para 2.

Art. 127 Each partner shall have a company interest in the company's assets the amount of which shall be determined in proportion to its interest in the registered capital, unless otherwise agreed.

Art. 128 The certificates issued to the partners for evidencing their participation in the company shall not be negotiable securities.

Art. 129 (1) An interest in a limited liability company may be transferred and inherited. The transfer of an interest from one partner to another shall be unrestricted, and the transfer to third parties shall be subject to the provisions for admitting new partners.

(2) An interest in a limited liability company shall be transferred with notarized signatures and shall be registered in the commercial register.

Art. 130 The transferee shall be liable jointly and severally with the transferor for any payments to the registered capital due at the date of transfer.

Art. 131 The partition of an interest shall be admissible only with the consent of the partners, unless otherwise agreed.

Art. 132 Where one interest belongs to several persons they may exercise their rights over it only jointly. They shall be liable jointly and severally for any obligations arising from such interest. The joint owners of the interest shall designate a person to represent them before the company.

Art. 133 (1) The partners cannot claim their interests as long as the company exists. They are only entitled to part of the profits in proportion to their interests, unless otherwise agreed.

(2) No interest on the partner's profits may be agreed upon.

Art. 134 (1) For covering losses and in case of temporary shortage of cash the partners may be required, by a general meeting resolution, to make additional monetary contributions within a fixed period. The additional contributions shall be in proportion to the respective interests in the capital, unless otherwise determined.

(2) A partner who has not voted for the decision under para 1 shall have the right to terminate his participation in the company according to art. 125, para 2 and 3. This right may be exercised within one month from the meeting - for the partners who have not attended or have been regularly invited, or from the notification - for all other partners.

(3) The additional contributions shall not affect the company's registered capital. It may be agreed that the company shall pay interest on them. Article 73c shall not apply for reimbursement of additional monetary instalments.

Section III.

Management

Art. 135 (1) The company's organs shall be:

1. the general meeting;

2. the manager (managers).

(2) The manager does not necessarily have to be a partner.

Art. 136 (1) The general meeting of partners shall consist of the partners.

(2) The company's manager shall take part in the general meeting's sittings in a consultative capacity.

(3) Where the number of employees exceeds 50, they shall be represented in the general meeting in a consultative capacity.

Art. 137 (1) The general meeting shall:

1. amend the articles of incorporation;

2. admit and expel partners, give consent on the transfer of an interest to a new partner;

3. approve the annual report and balance sheet, distribute the profits and resolve on their payment;

4. resolve on the increase or decrease of the registered capital;

5. appoint a manager, fix his remuneration and relieve him of liability;

6. resolve on setting up or closing down branches and participation in other companies;

7. resolve on the acquisition or alienation of real property and real rights therein;

8. resolve on bringing a company action against the manager or comptroller and appoint an attorney to proceed with the suits against them;

9. resolve on additional monetary contributions.

(2) Each partner has as many votes in the general meeting as its interest of the capital, unless the articles provide otherwise.

(3) Resolutions under para 1, items 1, 2 and 9 shall be adopted by a majority of more than three thirds of the capital and the decisions under item 4 - unanimously by all partners, and the company contract can stipulate a larger majority. The partner whose expulsion is put to a vote shall not vote and his share shall be deducted from the capital in determining the majority. All remaining resolutions shall be adopted with a majority of the capital, unless the Articles provide otherwise.

(4) The partners may vote by proxy only when such proxy holds a special power of attorney in writing; the above rule shall not apply to partners which are legal persons or to agents by operation of law.

(5) The general meeting shall adopt resolutions on labour and social issues only after hearing the position of a representative of the company's employees.

Art. 138 (1) A general meeting shall be convened by the manager at least once every year.

(2) The manager shall also convene a general meeting upon the request in writing of the partners whose interests amount to at least one tenth of the capital. Should the manager fail to convene a general meeting within two weeks, the partners which have requested its convening shall be entitled to do so.

(3) The manager shall convene a general meeting immediately should the losses exceed one fourth of the registered capital, as well as when the net value of the property of the company under art. 247a, para 2 drops under the size of the registered capital.

Art. 139 (1) The general meeting shall be convened by a notice in writing received by each partner at least 7 days before the date of the meeting, unless the articles provide otherwise. The notice shall specify the business to be transacted.

(2) general meeting resolutions may be adopted in absentia when all partners have stated in writing their consent for the resolution.

Art. 140 (1) The general meeting resolutions which are related to registrations pursuant to Art. 119, paragraph 2 shall be registered in the commercial register.

(2) Paragraph 1 shall apply to the resolutions of the owner of a single person company.

(3) The decisions regarding amendment and supplement of the company contract and termination of the company shall enter into force upon their entry in the commercial register.

(4)  Increase and reduction of the capital, acceptance and exclusion of a partner, transformation of the company, election and release of a manager, as well as appointment of liquidator shall have effect from the time of their entry in the commercial register.

Art. 141 (1) The manager shall organize and direct the activities of the company in accordance with the law and the general meeting resolutions.

(2) The company shall be represented by the manager. Where several managers have been appointed each one of them may act independently, unless the Articles provide otherwise. Other restrictions of the representative authority of the manager shall not have effect regarding third persons.

(3) The name of the manager, who shall present a notary certified consent with a specimen of the signature, shall be registered in the commercial register.

(4)  The authorisation of the manager may be withdrawn at any time and his name may be written off the commercial register.

(5) The manager may request to be written off the commercial register by a written notification to the company. Within one month from receipt of the notification the company shall declare for entry his release in the commercial register. Should the company fail to do so the manager may declare himself the entry of this circumstance which shall be registered regardless of whether another person has been elected in his place.

(6) The empowering and its deletion shall take effect regarding third diligent persons after their inscription.

(7) The relations between the company and the manager shall be settled by a contract for commissioning of the management. The contract shall be concluded in writing on behalf of the company through a person authorised by the general meeting of the partners or by the single owner.

Art. 142 (1) Without the consent of the company the manager may not:

1. effect commercial transactions in his own or in a third party's name;

2. participate in partnerships and partnerships limited by shares, and in limited liability companies;

3. hold positions in managing organs of other companies.

(2) The limitations under paragraph 1 shall apply when the activities carried out are similar to those of the company.

(3) For violations of his obligations under paragraph 1 the manager shall owe compensation for damages caused to the company.

Art. 143 (1) The company shall keep a book of interests and minutes book on the general meeting resolutions.

(2) The value of each partner's interest, the payments made and all relevant changes thereto shall be recorded in the book of interests.

(3) The manager shall be responsible for the regular keeping of the company books.

Art. 144 (1) The articles may provide for the appointment of a comptroller (comptrollers) who shall supervise the observance of the articles, the taking of proper care of the company's property and shall report to the general meeting.

(2) The following may not be comptrollers:

1. the managers, their deputies and company employees;

2. spouses, descendants or ascendants and collateral relatives to the third degree of the persons under the preceding item;

3. persons who with a sentence have been deprived of the right to hold a position of financial accountability.

(3) In a single person company the comptroller shall be appointed by the owner.

Art. 145 The manager and the comptroller shall be financially liable for damages caused to the company.

Art. 146 (1) The company's annual financial report shall be audited by one or several auditors who shall be certified public accountants in cases provided by a law.

(2) Such audit shall be a condition for approving the annual financial report.

(3) The auditors shall be appointed by the general meeting before the expiration of the calendar year. They shall be liable for the proper and unbiased audit and for maintaining confidentiality.

(4) The accepted annual financial report shall be presented to the commercial register.

Art. 147 (1) The single owner of the capital shall manage and represent the company either personally or through an appointed by it manager. In case the owner is a legal person the manager of such legal person or a person designated by him shall manage the company.

(2) The single owner of the capital shall resolve on the issues falling within the powers of the general meeting, for which a written statement shall be made in the form for the decisions of the general meeting.

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

Section IV.

Amending the articles of Incorporation

Art. 148 (1) The registered capital may be increased through:

1. increasing the value of the interests;

2. subscribing new interests;

3. admitting new partners.

(2) The partners may increase the value of the interests pro rata to their holdings, unless the articles of incorporation or the general meeting resolution provide otherwise.

Art. 149 (1) The capital may be reduced to the minimum established by a law by a resolution to amend the company contract observing the requirements of Articles 150 and 151. Carried out in this case can be simultaneously increase or reduction of the capital by the order of art. 203.

(2) The resolution shall state the purpose of the reduction, its amount and the manner through which it shall be accomplished.

(3) The reduction may be effected through:

1. reducing the value of interests;

2. cancellation of the interest of a partner which has terminated its participation;

3. relieving of the obligation to pay up the unpaid portion of the registered capital.

Art. 150 (1) The resolution to reduce the registered capital shall declared in the commercial register and shall be announced. With the announcement it shall be considered that the company has stated that it is ready to provide security for claims or to pay its obligations as of the moment of the announcement to the creditors which do not agree with the reduction.

(2) The creditor's consent for the reduction shall be assumed if within three months of the announcement they do not express in writing their objection.

(3) (rep.)

Art. 151 (1)The amendment to the articles with which the registered capital is reduced shall be submitted at the commercial register and registered upon expiration of the time period specified in the previous articles.

(2) Attached to the application for registration shall be proof of observance of the requirements of Art. 150 and a statement in writing of the manager that either security has been provided or the debt has been repaid to the creditors which have not consented to the reduction.

Art. 152 Should the data for registration of the reduction provided by the manager prove to be untrue, he shall be liable for the damages suffered by the creditors to the extent they could not be satisfied by the company. In the case of several managers they shall be liable jointly and severally.

Art. 153 Payments to the partners pursuant to a reduction of the registered capital may be made only after the reduction has been registered and after the creditors who have expressed disagreement with the reduction have received indemnification or payment.

Section V.

Dissolution and Liquidation of the Company

Art. 154 (1) The company shall be dissolved:

1. with the expiration of the term set in the articles;

2. upon decision of the partners adopted with a majority of 3/4 of the capital, unless the company contract stipulates a higher majority;

3. through a consolidation or merger with a joint stock company or another limited liability company;

4. upon being declared bankrupt;

5. by a decision of the district court in cases provided for by law.

(2) The articles may provide for other grounds for dissolution of the company.

Art. 155 The company may be dissolved by a decision of the district court at its seat upon:

1. an action by the partners showing serious cause. The action shall be brought against the company if the plaintiffs' interests represent more than one fifth of the registered capital;

2. by an action by the public attorney where activities of the company are in contravention to the law.

3.  by an action of the public attorney when no manager of the company has been registered.

Art. 156 (1) In the case of dissolution of a company pursuant to Art. 154, items 1, 2 and 5 and Art. 155 a liquidation procedure shall be initiated.

(2) The company's liquidator shall be its manager, except where another person has been appointed with the articles or with a resolution of the general meeting.

(3) Upon request of the comptroller or of partners holding at least one tenth of the interests the court may appoint another liquidator.

(4) The liquidation of the company shall be performed pursuant to Chapter Seventeen.

Art. 157 (1) A company in which the capital is owned by a single natural person shall be dissolved upon the death of such person, except where provided otherwise or where the heirs wish to continue its activities.

(2) Where the capital is owned by a single legal person the company shall be dissolved with the dissolution of that legal person.

Chapter fourteen. JOINT STOCK COMPANY

Section I.

General Provisions Definition

Art. 158 (1) A joint stock company is a company the capital stock of which is divided into shares. The company shall be liable before its creditors with its assets.

(2) The trade name of the joint stock company shall include the extension "aktsionerno druzhestvo" [joint stock company] or the abbreviation "AD".

Art. 159 (1) A joint stock company can be found by one or more individuals or corporate bodies.

(2) When a joint-stock company is formed by one person a constituent act shall also approve the statutes and the first supervisory board or board of directors shall be appointed.

(3) The constituent act shall be issued in writing.

Art. 160 (1) Founders are those persons who have registered stocks at the constituent assembly.

(2) Persons declared bankrupt may not be founders.

Art. 161 (1) The capital stock and the value of the shares shall be designated in leva.

(2) The minimum value of the capital of a joint-stock company shall be 50 000 leva.

(3) The minimum amount of the capital stock required for performing banking, insurance activities or activity on voluntary health assurance shall be determined by a separate law.

(4) The capital stock must be fully subscribed. The company cannot register stocks from its capital. When this prohibition is violated at the time of founding the company the founders shall be jointly liable for the instalments against the registered stocks. If a person subscribes shares on own behalf but on the account of the company, they shall be assumed acquired only on the account of this person.

Article 162  The minimum nominal value of a stock shall be 1 lev. Larger nominal values of stocks must be determined in integer leva

Section II.

Incorporation Prospectus

Art. 163 (1) The joint-stock company shall be constituted at a constituent assembly which shall be attended by all persons who register stocks. Founder can be represented by a proxy with an explicit letter of attorney with notary certified signature.

(2) The stocks shall be registered at the constituent assembly.

(3) The constituent assembly shall:

1. take decision for constituting the company;

2. adopt the statutes;

3. establish the size of the expenses related to the constituting;

4. elect supervisory board, respectively board of directors.

(4) The decisions under para 3, item 1 and 2 shall be adopted unanimously, issuing written statement for which art. 232 shall apply.

(5) When a joint-stock company is founded by one person a constituent act shall be issued.

Art. 164 (rep.)

Art. 165  The statutes must contain:

1. the firm, the headquarters and the address of management of the company;

2. the subject of activity and the term, if any;

3. size of the capital, as well as the share of it which shall be paid in at the establishing of the company, the type and the number of the stocks, the rights for the individual classes of stocks, the special conditions for their transfer, if any, as well as the nominal value of the individual stock;

4. the bodies of the company, their mandate and the number of their members;

5. the type and the value of the non-pecuniary instalments, if any, the persons who make them, the number and the nominal value of the stocks to be granted;

6. the advantages which the said founders shall keep for themselves personally, if such are stipulated;

7. the conditions and the order of issuing stocks subject to reverse purchase, if such is stipulated;

8. the way of distribution of the profit;

9. the way of convening the general assembly;

10. other conditions in connection with the constituting, the existence and the termination of the company.

Art. 166 (1) Monetary payments shall be made to a bank account opened by the managing board, respectively by the board of directors, to the name of the company, with an indication of the name of the payer, and any payments with deposited sums shall be effected with the unanimous decision of this body.

(2) The provisions of Articles 72 and 73 shall apply mutatis mutandis to non-monetary contributions.

(3) If, within three months the managing board, respectively the board of directors, does not certify before the bank that the company has been declared for registration the payers can draw back the instalments in full. The members of the respective board shall be jointly responsible for the payment of the instalments.

Art. 167 (1) For payments or contributions for subscribing to shares the stockholders shall receive interim certificates signed by an authorised member of the managing board, respectively the board of directors.

(2) The stockholders shall receive their shares upon presentation of interim certificates.

Art. 168 (rep.)

Art. 169 A joint-stock company may be incorporated through subscription for raising capital only if a law explicitly stipulates the requirements and the order thereof.

Art. 170 (rep.)

Art. 171 (rep.)

Art. 172 (rep.)

Art. 173 (rep.)

Art. 174 (1) For the registration of a joint stock company in the commercial register it shall be necessary that:

1. the statutes have been adopted;

2. the full amount of the capital stock has been subscribed;

3. to have had paid the part of the value of each stock stipulated by the statutes, but no less than 25 percent of the nominal or issued value of each stock stipulated by the statutes;

4. the members of the board of directors or, respectively, the supervisory and managing board have been appointed;

5. the remaining requirements of the law have been fulfilled.

(2) Entered in the commercial register shall be the data under art. 165, item 1 - 4, item 5 - only the type and the value of the non-pecuniary instalment - and item 10, as well as the names of the members of the board of directors, respectively of the supervisory and managing board. To the entry application attached shall be the constituent statement and a list of the persons who have registered stocks at the time of constituting certified by the managing board or by the board of directors. When, after the constituting of the company the stocks are acquired by one person entered in the commercial register shall be the name, respectively the company and the unified identification number of the stock holder.

(3) For entering into the commercial register the implementing of banking and insurance activity, activity at the stock exchange, investment broker, investment company, managing company and other activities for which certain law provides accomplishment with a permission by a state body shall be necessary the corresponding license or permission to be presented.

(4) For amendment or supplement of the statutes in the commercial register shall be presented the statutes with the amendments by the respective date, certified by the person or by the persons representing the company.

Section III.

Shares Nominal Value of the Shares.

Art. 175 (1) A share shall be a security which shall attest to the fact that its owner participates in the capital stock with the nominal value indicated on it.

(2) A joint stock company may not issue shares of a different nominal value.

(3) Shares may be issued in denominations of 1, 5, 10 and multiples of 10 shares.

Art. 176 (1) The issue price is the price at which the shares shall be purchased by the founders or, respectively, the subscribers in case the capital is raised through subscription.

(2) The issue price shall not be lower than the nominal value. Shares may also be subscribed at a price higher than the nominal value.

(3) The difference between the nominal value and the issue price shall be set aside for the company's reserve fund.

Art. 177 Shares are indivisible. Where a share belongs to several persons they shall exercise their rights in it jointly by designating a proxy.

Art. 178 (1) Shares may be registered or bearer shares. Preferred shares may also be issued.

(2) The joint-stock company can also issue non-cash stocks. The issuance and the administering of non-cash stocks shall be carried out by an order established by a law.

(3) Bearer shares shall not be delivered until payment of their nominal value or issue price.

(4) Where bearer shares are delivered before payment of the full issue price the amount of the instalments shall be indicated on them.

Art. 179 The joint stock company shall keep a stockholders' register in which the names and addresses of the owners of registered shares shall be recorded and the type, nominal value and issue price, quantity and serial numbers of the shares shall be indicated. The same shall be applied for interim certificates.

Art. 180 Bearer shares shall be exchanged for registered shares and vice versa upon request of the shareholder after payment in full of their price, unless the statutes provide an order for it.

Art. 181 (1) A share entitles its owner to one vote in the general meeting of stockholders, to a dividend and to a share in the assets in case of liquidation in proportion to the nominal value of the share.

(2) Where a company issues shares with special rights this must be indicated and provided for in the statutes.

(3) The shares providing equal rights form a separate class. Not admitted shall be restriction of the rights of individual stock holders of one class.

Art. 182 (1) Preferred shares may provide a guaranteed or additional dividend or share in the company's assets in case of liquidation, as well as other rights provided for in this Act or the statutes. The statutes may provide that preferred shares have no voting rights, which must be indicated on the respective share.

(2) Preferred shares having no voting rights shall be included in the nominal value of the capital stock.

(3) It shall not be allowed more than 1/2 of the shares to be non-voting shares.

(4) Where a dividend due from a preferred share without voting rights is not paid in the course of 1 year and the delayed payment is not made during the following year together with the dividend due for that following year, the preferred share shall acquire voting rights pending payment of the delayed dividends. In this case the preferred shares shall be taken into account in determining the quorum and majority.

(5) In order to adopt a resolution with which the advantages arising from the nonvoting preferred shares are to be restricted, it shall be necessary to obtain the consent of the preferred stockholders, which shall convene at a separate meeting. The meeting may conduct business if not less than 50 per cent of the preferred shares are represented. Resolutions shall be adopted with a vote of at least three quarters of the shares so represented. The preferred shares shall acquire the right to vote upon the removal of the advantages.

Art. 183 (1) A share shall contain:

1. the designation `share' for a denomination of one or `shares' for larger denominations, preceded by the respective number thereof;

2. type of the shares;

3. the number of the denomination and the serial numbers of the shares comprised therein;

4. the trade name and seat of the joint-stock company;

5. the amount of the capital stock;

6. the total number of shares, their individual nominal value and their denomination structure;

7. the coupons and their maturity;

8. the signatures of two persons having authority to bind the company, and the date of issue.

(2) A printed signature on the share shall also be considered valid signature.

(3) Filled in on the face of a registered share shall be the name of its first owner.

Art. 184 (1) Unless otherwise provided in the statutes, shares shall be issued with dividend coupons for 20 years.

(2) Coupons may not be transferred separately from the shares.

(3) A coupon shall carry the designation `Coupon', the trade name of the joint stock company, the number of the coupon, indication as to the share and its denomination, and the year for which dividend is payable on presentation thereof.

Art. 185 (1) Bearer shares shall be transferred and pledged by delivery.

(2) Registered shares shall be transferred by endorsement which, to be binding on the company, must be recorded in the registered stockholders register. The statutes may provide for other conditions for the transfer of registered shares.

(3)  Registered shares shall be pledged by endorsement with "warranty clause", "pledge clause" or other expression meaning security. The pledge shall have effect for the company from the time of its registration in the book of the registered stock holders. The right to vote on pledged shares shall be exercised by the stock holder, unless the pledge contract stipulates otherwise. Article 473 shall not apply.

Art. 186 The transferor of registered shares which have not been fully paid up or from which other obligations towards the company arise shall be liable jointly and severally with the transferee. The transferor's liability shall lapse upon the termination of a period of two years from the date that the transfer was recorded in the stockholders register.

Art. 187 (1) An interim certificate may not be transferred prior to the incorporation of a company.

(2) Transfers of interim certificates shall be subject to the provisions of Art. 185, paragraph 2.

Art. 187a (1) The company can acquire own stocks only:

1. for reduction of the capital under art. 200, item 2;

2. for universal legal succession, except in cases of reorganization;

3. if this is gratuitous;

4. if it carries out, by profession, transactions with securities or acquires the stocks in fulfilment of an order of a third person;

5. for exclusion of a stock holder according to art. 189, para 2 and 3;

6. as a result of compulsory fulfilment of an obligation of a stock holder to the company;

7. if they have been issued as privileged stocks specially by this privilege;

8. for reverse purchase.

(2) In the cases under para 1, item 3, 4,6, 7 and 8 the stocks must be paid in full.

(3) The company shall terminate the exercising of the rights on the own stocks until their transfer.

(4) The total nominal value of the own stocks acquired according to para 1, with exception of those under item 1, cannot exceed 10 percent of the capital. The company shall be obliged to transfer, within three years, the possessed own stocks which exceed this amount.

(5) If the stocks acquired in the cases under para 1, item 2 - 8 are not expropriated within the period under para 4 they shall be invalidated and art. 200, item 2 shall apply.

(6) The own stocks shall not be taken into consideration in determining the net value of the property of the company under art. 247a, para 2.

Art. 187b (1) The company can buy own stocks on the grounds of a decision of the general assembly of the stock holders which shall determine:

1. the maximal number of stocks subject to reverse purchase;

2. the conditions and the order upon which the board of directors or the managing board shall carry out the purchasing within a definite period not longer than 18 months;

3. the minimal and the maximal size of the purchase price.

(2) The decision under para 1 shall be taken by a majority of the represented capital and, if the reverse purchase is not explicitly stipulated by the statutes - by a majority of two thirds of the represented stocks. The decision shall be entered in the commercial register.

(3)The purchasing shall be carried out by respectively applying art. 247a, para 1 and 2.The total nominal value of the bought up shares and of these under Art. 187a, Para 4 may nor exceed 10 per cent of the capital. Regarding the bough up shares which overcome this amount, Art. 187d shall be applied.

(4)  The Managing Board, respectively the Boar of Directors shall execute the repurchase observing the requirements of Para 1 - 3.

Art. 187c (1) The statutes can stipulate the purchasing of stocks subject to reverse purchase, under conditions and by an order stipulated by it.

(2) The company shall present to the commercial register the proposal for reverse purchase, which shall be announced.

(3) The purchasing can be carried out only by sums designated for distribution according to art. 247a, para 1, 2 and 3.

(4) The company shall be obliged to form a reserve amounting to the nominal value of all purchased stocks under para 1. This reserve can be distributed among the stock holders only in reducing the capital by the purchased stocks, as well as to be used for increase of the capital.

Art. 187d. If the company has acquired own stocks in violation of art. 187a through 187c, they must be transferred within one year from their acquisition. Otherwise the stocks shall be invalidated and art. 200, item 2 shall apply.

Art. 187e. The annual business report of the company shall obligatorily be pointed out:

1. the number and the nominal value of the acquired and transferred through the year own stocks; the share of the capital which they represent, as well as the price at which the acquiring or transfer have been executed;

2. the grounds for the acquisitions made through the year;

3. the number and the nominal value of the possessed own stocks and the share of the capital which they represent.

Art. 187f. (1) The rules of art. 187a through 187e shall also apply when:

1. stocks of the company are acquired and possessed by one person for the account of the company;

2. stocks of the company are acquired and possessed by another company where the first one directly or indirectly possesses a majority of the right of voting or on which it can exercise directly or indirectly control;

3. the company shall accept own stocks or stocks of a company under item 2 as a pawn.

(2) When the company has registered own stocks at the time of its constituting or increase of the capital, they shall be immediately transferred. Otherwise the stocks shall be nullified and Art. 200, item 2 shall be applied. Regarding these stocks Art. 187a, Para 3 and Art. 187e shall be applied.

(3) The company cannot grant loans or secure the acquisition of its stocks by a third person. The restriction shall not apply for transactions concluded by banks or financial institutions during their usual activity, if as a result of this the pure value of the property continue to meet the requirements of Art. 247a, Para1 and 2.

Section IV.

Contributions

Art. 188 (1) The stockholders shall be obligated to make contributions for the shares subscribed, which shall cover the fixed by the statutes portion of the value of the shares. The rest portion of the value shall be contributed within a term defined by the statutes, but not later than 2 years from the court-registration of the company, respectively from the increase of the capital.

(2) Partial contributions may vary for individual stockholders, if the statutes provide so expressly.

Art. 189 (1) The stockholders which have not made their contributions within the specified time periods shall owe interest, unless the statutes do not provide for liquidated damages. In case of a delayed non-monetary contribution, compensation for actual damage suffered may be claimed.

(2) Stockholders whose contributions are overdue, if they do not make the due contributions within one month of written notice to do so, shall be deemed expelled. The notice must be announced in the commercial register unless the transfer of the shares is subject to the consent of the company.

(3) A shareholder so expelled shall lose its shares and any contributions made. The shares of a shareholder so expelled shall be cancelled and destroyed. The company shall offer for sale new shares substituting the cancelled ones. The contributions made by the expelled shareholder shall be appropriated to the company's reserve fund.

Art. 190 (1) The stockholders shall not be paid interest on contributions made, except in cases provided for in the statutes.

(2) Where the stockholders have made partial contributions in different proportions, interest shall be due on the difference, unless the statutes provide otherwise. The interest shall be paid prior to the dividends according to art. 247a regardless of the decision of the general assembly of the stock holders for distribution of the profit.

(3) The fruits derived from contributions made prior to incorporation shall be in the company's favor, unless the statutes provide otherwise.

Art. 191 The statutes may provide that the stockholders shall provide security for the portion not contributed.

Section V. Increase of the Capital Stock

Art. 192 (1) The capital stock may be increased by issuing new shares, by increasing the nominal value of shares already issued, or by converting bonds into shares pursuant to Art. 215.

(2) The general meeting of stockholders resolution to increase the capital stock shall be adopted by a two thirds majority of the votes of the shares represented at the meeting. The statutes may provide for a larger majority, as well as for additional conditions.

(3) Where shares of various classes exist, the resolution shall be adopted by each class at a separate meeting.

(4) Where the new shares are to be sold at a price exceeding their nominal value, the minimum sale price shall be specified in the general meeting resolution.

(5) An increase of the capital stock is admissible only after the specified by the statutes amount has been fully paid up.

(6) In case of increase of the capital in violation of art. 161, para 4 the members of the managing board, respectively of the board of directors, shall be jointly liable for the instalments for the registered own stocks. If a person subscribes stocks on his/her own behalf, but on the account of the company, they shall be assumed acquired only on the account of the person.

(7) In the case of increase of capital Chapter Fourteen, Sub-section II shall apply, respectively, and increase of the capital through subscription shall be carried out under conditions and by an order established by a law.

(8) For entering the increase of the capital with subscription shall be necessary to be presented a confirmation of a prospectus except in the cases when such is not required by the law.

Art. 192a.  (1) For entering the increase of the capital in the commercial register shall be necessary:

1. to have registered the new stocks;

2. to have installed at least 25 percent of the nominal value of the registered new stocks;

3. to have paid the difference between the nominal and the issued value of the new stocks.

(2) When the new stocks are not registered in full the capital shall be increased only by the value of the registered stocks if the decision of the general assembly for the increase admits such possibility.

(3) Presented at the commercial register shall be a list of the persons who have registered the new stocks, certified by the managing board, respectively by the board of directors.

Art. 193  (1) Where the capital stock is increased by non-monetary contributions, the general meeting resolution shall specify the subject of each contribution, the contributor, and the nominal value of shares given for such contribution.

(2) The conclusion of the experts under Art. 72, Para 2 shall become a part of the materials under Art. 224 and shall be submitted at the commercial register for announcement together with the decision for increasing the capital.

Art. 194 (1) Each shareholder is entitled to acquire a part of the new shares in proportion to its share in the capital stock prior to the increase.

(2) For stocks of different classes the right under para 1 shall be valid for the stock holders of the respective class. The rest of the stock holders shall exercise their advantage after the stock holders of the class for which new stocks are issued.

(3) The right of the stock holders under para 1 and 2 shall be redeemed within a period determined by the general assembly but at least once a month after announcement in the commercial register of an invitation for registering the stocks. The invitation for registration of new stocks shall be announced together with the decision for increase of the capital in the commercial register.

(4) The right of the stock holders under para 1 and 2 can be restricted or dropped only by a decision of the general assembly taken by a majority of two thirds of the votes of the represented stocks. The managing board, respectively the board of directors shall present a report regarding the reasons for revoking or the restriction of the advantages and shall substantiate the issued value of the new stocks. The decision of the general assembly shall be submitted to the commercial register for announcement.

Art. 195 The increase of the capital stock may be conditional upon the buying of the shares by certain persons at a certain price, or against bonds issued by the company.

Art. 196  (1) The statutes may empower the managing board, or the board of directors as the case may be, to increases the capital stock up to a certain nominal amount in the course of five years from the date of incorporation, by issuing new shares. A resolution to the same effect may also be passed by amending the statutes in compliance with the requirements of art. 192, para 3, for a period not exceeding five years from the date of registration of the amendment.

(2) For increase of the capital under para 1 shall apply art. 194, para 1 and 2.

(3) The managing board, respectively the board of directors, can exclude or restrict the right of the stock holders under art. 194, para 1 only if it has been authorised to do so by the statutes or by a decision of the general assembly taken by a majority of 2/3 of the votes of the represented stocks. The authorisation cannot be given for a period longer than the period under para 1. In this case the increase of the capital can also be made by the order of art. 193 and 195.

Art. 197 (1) The general meeting may resolve to increase the capital stock by partial capitalisation of profits. The resolution shall be adopted within three months from the date that the annual financial report for the previous year is approved, with a majority of the votes of three quarters of the shares represented at the meeting.

(2) The company's balance sheet shall be presented and the fact that the increase is from the company's own funds shall be explicitly stated upon filing the resolution to increase the capital stock for registration.

(3) The new shares shall be allocated among stockholders, including the company when it possesses own stocks on a pro rata basis. Any general meeting resolution in contravention of the latter provision shall be null and void.

Art. 198 (1) Upon registering the increase of the capital stock pursuant to the preceding Art., the supervisory board, or the board of directors as the case may be, shall, without delay, invite the stockholders to receive their shares.

(2) New bearer shares which have not been claimed within one year of the date that the increase of the capital stock was entered into the commercial register shall be sold on the stock exchange. The stockholders' rights shall lapse, and moneys from the sale shall be appropriated to the company's reserve fund.

Section VI.

Reducing the Capital Stock

Art. 199 (1) A reduction of the capital stock shall be implemented by a general meeting resolution.

(2) If there are several classes of shares, resolutions of each class of stockholders shall be necessary to reduce the capital stock.

(3) The resolution shall set forth the purpose of the reduction and the method by which it is to be effected.

Art. 200 (1) The capital stock may be reduced:

1. by reduction of the nominal value of shares;

2. by cancellation of shares.

Art. 201 (1) Shares may be cancelled forcibly or after their acquisition by the company.

(2) Forcible cancellation of shares shall be allowed if provided for in the statutes and the stocks registered under this condition.

(3) The prerequisites for, and the method of, forcible cancellation shall be set forth in the statutes.

Art. 202  (1) For creditors whose claims have arisen prior to announcement in the commercial register of the resolution on reduction of the capital shall apply respectively the rules of art. 150-153.

(2) The rule of para 1 shall not apply when the reduction of the capital has been made with the purpose of covering losses. In this case the stockholders shall not be released from the obligation for instalments.

(3) The rule of para 1 shall also not apply when the reduction is made by own stocks which have been paid up in full and have been acquired gratuitously or by resources under art. 247a, para 1 - 3. In these cases art. 187c, para 4 shall apply respectively.

Art. 203  (1)  The capital of the company can be simultaneously reduced and increased, so that the reduction shall have effect only if the planned increase of the capital is carried out.

(2) In the cases under para 1 the capital can also be reduced under the minimal size established by the law if by increasing the capital at least the minimum established by the law is achieved.

(3) The rule of art. 202, para 1 shall not apply if, as a result from the increase the size of the capital before its change is not achieved or exceeded.

Section VII.

Bonds

Art. 204

(1) Bonds can be issued by a joint stock company. Issuance of bonds through public offering may be carried out at least two years after the entering of the company in the commercial register and if there are two annual accounts approved by the general meeting.

(2) The requirement of para 1 shall not refer to bonds issued or guaranteed by the state.

(3) Resolutions to issue bonds may be adopted by the general meeting of stockholders, which can empower for that the board of directors, respectively the managing board by the order of art. 196.

(4) Bonds of same issue and same nominal value shall rank pari passu.

(5) Bonds may be in the form of bond stock and bond certificates. The rules for shares stipulated in this Act, with exception of art. 176, para 2 and art. 184, para 2, shall apply to the issue, transfer and pledge of bond stock and bond certificates.

Art. 205 (1) The issuance of bonds through subscription or other form of public offering shall be carried out under conditions and by an order established by a law.

(2) When issuing bonds in cases other than those under para 1 the company shall work out a proposal for registering bonds containing at least:

1. the decision under art. 204, para 3;

2. (rep.)

3. the total nominal and issuance value of the bond loan;

4. number, type, nominal and issuance value of the offered bonds, as well as estimated restrictions of their transfer;

5. for active bonds - the period until the maturity of the bonds, the scheme of acquittal of the bond loan, including the gratis period, if such is stipulated, the interest payments, the way of their calculation and the periodicity of the payments;

6. for bonds with other form of income - the way of formation of the income and the maturity of the payments;

7. the type and the size of the submitted security, if any;

8. the way and the term of payment of the interest and the main part;

9. initial and final date, as well as place and order of registering the bonds;

10. conditions of registering the bonds;

11. minimal and maximal size of the collected instalments by which the loan shall be considered concluded.

(3) The bonds shall be issued only after the full payment of their issuance value.

(4) The decision under art. 204, para 3 for issuing public issue of bonds can stipulate the application of, respectively, the provisions of the law regarding the agent of the bond holders and the security of a public issue of bonds.

Art. 206 (1) The raising of moneys and the delivery of the bonds shall be performed by a bank or investment mediator.

(2) Subscribers shall pay the relevant moneys into an accumulation account with a bank specified by the company. The sums in the said account may not be used prior to the announcement according to para 6.

(3) The decision under art. 204, para 3 shall determine the conditions under which the loan shall be considered concluded. Obligatory condition is for the issuance value of all registered bonds to be paid in full.

(4) Within 14 days from the conclusion of the offering the company shall conclude a contract with a bank settling the order and the way of servicing the payments under the bond loan.

(5) Should the term under art. 205, para 2, item 9 expire short of compliance with the terms provided for the contracting of the loan, moneys paid up shall be reimbursed to the subscribers together with such interest as accrued by the bank.

(6) Within one month from the final date for registration of the bonds under art. 205, para 2, item 9 the managing body of the company shall present at the commercial register for announcement notification for the concluded bond loan indicating:

1. the size of the loan;

2. the date of beginning of the period to maturity;

3. the date of maturity - for interest and main part payments;

4. the bank under para 4 servicing the payments on the bond loan;

5. the place, the date, the hour and the agenda of the first general meeting of the bond holders.

(7) The date of the first general meeting of the bond holders cannot be later than 30 days from the announcement under para 6. The place of holding the meeting cannot be different from the headquarters of the company.

(8) The company shall inform immediately the representatives of the bond holders under art. 209 and the bank servicing the payments on the bond loan about all changes of their trading activity related to its obligations regarding the issued bonds.

Art. 207 Null shall be every decision of the company for:

1. change of the conditions under which issued bonds have been registered;

2. issuance of new bonds with preferential regime of payment without the presence of consent at the general meetings of the bond holders from previous unpaid issues.

Art. 208  The first general meeting of the bond holders shall be legal if 1/2 of the registered loan is represented.

Art. 209 (1) The holders of bonds of the same issue shall form a group for the protection of their interests before the company.

(2) The group shall be represented by trustees elected by the general meeting of bond-holders. These trustees may not be more than three.

Art. 210 (1) The following may not be trustees as per the preceding Art.:

1. the debtor company;

2. persons related to the debtor company;

3. companies which have guaranteed, in part or in total, the liabilities assumed;

4. members of the supervisory board, the managing board or the board of directors of the company, or descendants, ascendants and spouses thereof;

5. persons who are prohibited by law from serving on company governing bodies;

(2) Trustees may be recalled by a general meeting resolution of bond-holders.

Art. 211 Trustees may perform acts to protect the bond-holders' interests pursuant to resolutions of the general meeting of bond-holders.

Art. 212 (1) The trustees of bond-holders may participate in the general meeting of stockholders without the right to vote. They may obtain information under the same terms as stockholders.

(2) Where decisions are adopted concerning the performance of obligations under the terms of the bond loan, the general meeting of stockholders shall hear the opinion of the bond-holders' trustees.

Art. 213 (1) The remuneration of the bond-holders' trustees shall be fixed by the company and shall be paid on its account. Should the company fail to fix such remuneration, the general meeting of bond-holders shall do so.

(2) Should the company object to the amount so fixed, the remuneration shall be fixed by an order of the district court upon application by the trustees.

Art. 214(1) The general meeting of bond-holders shall be called by the trustees of the bond-holders by an invitation announced in the commercial register at least 10 days before the meeting.

(2) The general meeting may also be called upon the request of the holders of not less than 1/10 of the respective issue of bonds or, if liquidation proceedings have commenced, upon the request of the liquidators of the company.

(3) The trustees of the bond-holders shall be bound in duty to call the general meeting of bond-holders upon receipt of notice from the governing bodies of the joint stock company as to:

1. a proposed amendment of the company's purposes or type, or for transformation of the company;

2. proposal for issuance of a new issue of preferred bonds.

(4) Each issue of bonds shall constitute a separate general meeting.

(5) The provisions for the general meeting of stockholders shall apply mutatis mutandis to the general meeting of bond-holders.

(6) The general meeting of stockholders shall be bound in duty to review a general meeting of bond-holders resolution.

Section VIII.

Conversion of Bonds into Shares

Art. 215 (1) The general meeting may resolve on the issuing of convertible bonds. This type of bonds may not be issued by companies in which the State owns more than 50 per cent of the capital stock. The stockholders may subscribe preferentially such bonds under the terms which apply to a subscription for a new issue of shares.

(2) The procedure for the conversion of bonds into shares shall be specified in the general meeting resolution on the issuing.

(3) The general meeting of stockholders may lay down the terms under which holders of bonds which are not redeemable by conversion into shares may so convert them.

(4) The issue price of the converted bonds may not be lower than the nominal value of the shares which the bond-holders would acquire by conversion.

(5) In case of reduction of the capital stock because of losses through a reduction of the number of shares or of the nominal value thereof, the rights of bond-holders shall be reduced proportionally.

Art. 216 A resolution to issue new bonds convertible into shares shall be valid subject to approval by the general meeting of bond-holders which have acquired the right to convert bonds into shares.

Art. 217 Upon adoption of a resolution to increase the capital stock, the managing board, or the board of directors as the case may be, shall determine the period within which bonds may be converted into shares. This period may not exceed three months.

Art. 218 The managing board, respectively the board of directors, shall declare for registration the increase of the capital stock occurring as a result of conversion of bonds into stocks.

Section IX.

Joint Stock Company Organs

Art. 219 (1) The joint stock company organs shall be:

1. the general meeting of stockholders;

2. the board of directors (one-tier system), or the supervisory board and the managing board (two-tier system).

(2) In a sole owned joint-stock company the sole owner of the capital shall decide on the issues of competence of the general assembly.

Art. 220 (1) The general meeting comprises the voting stockholders. A voting shareholder may participate in a general meeting either in person or by proxy. A member of the board of directors, respectively of the supervisory and managing board may not represent a stock holder.

(2) The stock holders of preference stocks without voting right, as well as the members of the board of directors, respectively of the supervisory and managing board, when they are not stock holders, shall participate in general meeting proceedings without the right to vote.

(3)  When the persons hired by the company are more than 50 they shall be represented in the general meeting by one person with advisory power. Their representative shall have the rights under art. 224.

Art. 221 The general meeting shall:

1. amend the statutes;

2. resolve on increase or reduction of the capital stock;

3. resolve on transformation and dissolution of the company;

4. elect and recall the members of the board of directors, or of the supervisory board as the case may be;

5.  determine the remuneration of the members of the supervisory board, respectively of the members of the board of directors to whom the management will not be commissioned, including their right to receive a part of the profit of the company, as well as to acquire shares and bonds of the company;

6. appoint and dismiss CPA auditors;

7. approve the annual financial report as certified by the appointed auditor, take decision for distribution of the profit, for complementing Fund "Reserve" and for payment of dividend;

8. resolve on issuing of bonds;

9. appoint liquidators upon dissolution of the company, except in the event of bankruptcy;

10. relieve of responsibility the members of the supervisory board and managing board, or of the board of directors as the case may be;

11. resolve on other matters which by virtue of the law or the statutes are in its competence.

Art. 222 (1) A general meeting of stockholders shall be held at least once a year in the seat of the company unless the statutes stipulate another place on the territory of the Republic ofBulgaria.

(2)  The first general meeting shall be held not later than 18 months from the incorporation of the company and the next regular meetings - not later than 6 months from the end of the year of account.

(3) If the losses exceed one second of the capital general assembly shall be held not later than there months from establishing the losses.

(4) The general meeting shall elect a chairman and a secretary of the meeting, unless the statutes provide otherwise.

Art. 223 (1) The general meeting shall be convened by the board of directors, or by the managing board as the case may be. A general meeting may also be convened by the supervisory board, as well as on the request of the owners who have possessed shares for a period longer than three months, representing at least 5 percent of the capital.

(2) Should, within one month from filing the request of the stock holders, holding at least 5 percent of the capital, under para 1, it is not granted or if the general assembly is not held within 3 months from filing the request the district court shall convene a general assembly or shall empower the stock holders who have requested the convening or their representative to convene the assembly. The circumstance that the stocks have been possessed for a period longer than three months shall be established in court by a notary certified declaration.

(3) The general meeting shall be convened by an invitation announced in the commercial register. If stocks have not been issued to a bearer the statutes can stipulate for the convention to be carried out only by written invitation.

(4) As a minimum the notice shall state:

1. the trade name and seat of the company;

2. the place, date and hour of the meeting;

3. the type of general meeting;

4. the formalities, if provided for in the statutes, to be satisfied for attendance and exercise of the right to vote;

5. the agenda and business to be transacted, and the concrete proposals.

(5) The time period from announcement in the commercial register to the opening of the meeting shall not be less than 30 days.

Art. 223a.  (1) Stock holders who have possessed for a period longer than three months stocks representing at least 5 percent of the capital of the company may, upon announcement in the commercial register or sending invitation, include other issues in the agenda of the general meeting.

(2) Not later than 15 days before the opening of the general meeting the persons under para 1 shall furnish for announcement in the commercial register a list of the issues to be included in the agenda and the proposals for decisions. With the announcement in the commercial register the issues shall be considered to be included in the proposed agenda.

(3) The circumstance that the stocks