IX.

Act CXLIV of 1997

on Business Associations

 

PART 4:

Chapter XII
Companies Limited by Shares

Title 1.
General Provisions

Section 175.
(1) Companies limited by shares are business associations founded with a share capital (subscribed capital) consisting of shares of a pre-determined number and face value, in the case of which the obligation of members (shareholders) to the company limited by shares extends to the provision of the face value or issue value of shares. With the exceptions defined in this Act, shareholders shall not bear liability for the obligations of a company limited by shares.
(2) The designation "company limited by shares" (részvénytársaság), or its abbreviation "rt.", shall be indicated in the company"s name.
Section 176.
(1) The sum of the face value of all shares shall be the share capital (subscribed capital) of a company limited by shares.
(2) Issue of shares below face value is null and void. Any damage resulting therefrom shall be borne by the issuers jointly and severally.
Section 177.
(1) A company limited by shares may be a close company or a public company.
(2) A company limited by shares is a close company if its shares are not issued publicly.
(3) A company limited by shares is a public company if its shares are issued publicly in part or in full.
Section 178.
(1) With due consideration of the statutory provisions on securities, the supreme body of a company limited by shares may pass a resolution on the change of the form of the company limited by shares according to the rules applicable to the alteration of the deed of foundation or statutes. In this case, a public company shall prepare its statutes in accordance with such new form, whereas a close company shall prepare its deed of foundation, respectively.
(2) If a public company continues to operate as a close company, the company shall, simultaneously upon submitting its deed of foundation to the court of registration, certify that its shares are not listed on the stock exchange. Following the publication of the change in the form of the company limited by shares in the Company Gazette, its shares shall not be traded by means of public offers for purchase or sale.
Title 2.
Shares
Types of Shares
Section 179.
(1) Shares are securities embodying membership rights, which can be bearer shares or registered shares (types of shares).
(2) The shares of a close company, as well as uncertificated shares prepared according to the statutory provisions on securities, may only be registered shares.
(3) In respect of companies limited by shares founded for certain activities set forth in a separate act, the law may stipulate the transformation of bearer shares into registered shares, or may prohibit the transformation of registered shares into bearer shares.
Section 180.
(1) Bearer shares are freely negotiable without an indication of their holder.
(2) Unless otherwise provided by law, registered shares are freely negotiable, however, the deed of foundation of a close company may restrict the negotiation of shares according to the provisions of this Act, or may make such transfer subject to the consent of the company.
(3) Printed registered share certificates are negotiated by means of the full or empty endorsement drawn up on the back side of the share or the sheet (allonge) attached to the share. In respect of the negotiation of uncertificated shares (Section 194), the provisions of Act CXI of 1996 on the Issue of Securities, on Investment Services and on the Stock Exchange (hereinafter referred to as "statutory provisions on securities") shall be authoritative. The law may stipulate that the negotiation of shares be valid only if effected on the basis of an agreement by the parties concluded according to legal regulations.
(4) In the event of the devolution of ownership rights in printed registered share certificates by inheritance, upon the request of the heir, the chairman of the board of directors shall be entitled and obliged, on the basis of a final certificate of inheritance, order of estate transfer, or a final judgment passed in inheritance proceedings, indicating the reference number and date thereof, to enter the change of owner on the back (allonge) of the shares.
(5) In the event of the acquisition of ownership rights in printed registered share certificates at an official auction, upon the request of the owner, the chairman of the board of directors shall be entitled and obliged, on the basis of the auction records, indicating the reference number and date thereof, to enter the change of owner on the back (allonge) of the shares.
Categories of Shares
Section 181.
(1) Within the individual types of shares, several categories of shares may be issued. The categories of shares are: ordinary shares, preference shares, employees" shares and interest-bearing shares. Shares not belonging to the categories of shares set forth in Sections 183-188 shall be considered ordinary shares.
(2) Within preference shares, shares may belong to different classes of shares [Subsection (2) of Section 183], and within one class of shares, shares of different content or shares representing different membership rights may be issued.
Section 182.
Within one category or class of shares, several series of shares may be issued. Shares of the same type, content and representing the same membership rights qualify as one series of shares. Shares of the same series may not differ in their face value or method of production.
Section 183.
(1) The deed of foundation (statutes) may, defining the relevant conditions, provide for the issue of registered shares which grant certain preferences to their holders over other categories of shares (preference shares).
(2) Within preference shares, the deed of foundation (statutes) may define the following:
a) preferred dividends,
b) upon termination of the company limited by shares without legal successor, preferred share of the assets to be distributed (preferred liquidation quota),
c) preference related to voting rights, or
d) class of shares granting pre-emption rights for the shares of a close company.
(3) The deed of foundation (statutes) may also establish a class of shares, to which the shares jointly representing entitlement to preferred dividends and preferred liquidation quota belong.
(4) The voting rights related to the preference shares defined in Paragraphs a), b) and d) of Subsection (2) and Subsection (3) may be restricted or prohibited by the deed of foundation (statutes). Failing this, the voting rights of preference shares shall be established in accordance with the face value of the shares.
(5) The sum of the face value of preference shares issued by a company limited by shares may not exceed half of the share capital of the company.
Section 184.
(1) From after-tax profits to be distributed among shareholders, shares granting preferred dividends entitle their holders to dividends prior to, or to a preferential degree over shares belonging to other categories or classes of shares.
(2) If, due to any reason, no dividends were paid in a certain year in respect of shares granting preferred dividends, the company limited by shares may, unless otherwise provided by the deed of foundation (statutes), pay dividends on the shares belonging to other categories or classes of shares in the next year only if the arrears of dividends due on shares granting preferred dividends are paid in full beforehand.
(3) If dividends due on preference shares with restricted or excluded voting rights are not paid, or not completely paid by the company limited by shares, and such payment is not effected in the next year together with the dividends for that year, the shareholders of preference shares shall be entitled to voting right, and to exercise such right as long as the dividend arrears are not paid by the company.
(4) Detailed rules related to enforcing the benefits attached to shares of preferred dividends shall be set forth in the deed of foundation (statutes).
Section 185.
(1) On the basis of shares granting preferred voting rights, shareholders may exercise multiple voting rights as defined in the deed of foundation (statutes). The voting rights attached to one share, however, may not exceed ten times the voting rights corresponding to the face value of the share.
(2) The deed of foundation (statutes) may also provide that resolutions of the general meeting be passed only with the positive vote of the simple majority of shares granting preferred voting right, or, if only one share granting preferred voting rights has been issued, with the positive vote of the shareholder holding such share. This right may be exercised only if represented at the general meeting in person or by proxy.
(3) Unless otherwise provided by law or the deed of foundation (statutes), preferred voting rights shall extend to all decisions falling within the competence of the general meeting.
Section 186.
Preference shares which vary rights attached to a series of shares issued earlier may only be issued on the basis of a resolution of all shareholders belonging to such series of shares passed by a majority of three-quarters or more of the votes, and a resolution of the general meeting altering the deed of foundation (statutes) thereafter.
Section 187.
(1) In accordance with the provisions of the deed of foundation (statutes), registered shares may be issued, free of charge or at a reduced price, for the full time or part time employees of the company limited by shares (employees" shares). A company limited by shares may pass a resolution on the issue of such employees" shares which entitle their holders to dividends from after-tax profits to be distributed among shareholders prior to the shares belonging to other categories or classes of shares, but following shares granting preferred dividends.
(2) Pursuant to the provisions of Section 255, employees" shares may be issued with a simultaneous share capital increase of the company limited by shares, up to fifteen per cent of the increased share capital at the most. Employees" shares may be transferred only to the employees of the company limited by shares, or to persons whose employment relationship is terminated due to retirement. Detailed conditions for the acquisition and transfer of employees" shares shall be set forth in the deed of foundation (statutes). The deed of foundation (statutes) may enable employees" shares be jointly acquired by certain groups of employees.
(3) Unless otherwise provided by the deed of foundation (statutes), the provisions contained in Subsections (4)-(6) shall be applied to the transfer and termination of employees" shares.
(4) In the event of the death of an employee or the termination of his employment relationship, excluding the case of retirement, his heir or former employer shall have the right to transfer the employees" shares in question to other employees of the company within a period of six months. In the event that this deadline expires without success, at the first meeting of the general meeting thereafter, the company shall withdraw the employees" shares in question with a corresponding reduction of its share capital, or shall decide to sell such shares after transforming such into ordinary shares, or preference or interest-bearing shares.
(5) In the event of inheritance, the deadline of six months set forth in Subsection (4) shall be calculated
a) from the death of the testator, if no probate is held,
b) from the date when the order of distribution providing for transfer the inheritance with full effect becomes final, if a probate is held,
c) from the date when the judgment of the court becomes final, in the event of inheritance proceedings.
(6) In the event of the withdrawal of shares or the transfer of shares following the transformation thereof, the face value of the shares shall be due to the former employee or his heir, which shall be disbursed, for heirs, within a period of thirty days, and for former employees, within a period of one year, respectively, following the withdrawal or transfer of the shares.
Section 188.
(1) In accordance with the provisions of the deed of foundation (statutes), registered shares entitling their holders to a pre-determined rate of interest may be issued to an extent of up to ten per cent of the share capital (interest-bearing shares).
(2) From after-tax profits, owners of interest-bearing shares shall be entitled to the interest calculated according to the method shown on the shares after the face value thereof. No interest may be paid to shareholders if as a result of this, the equity of the company does not reach the share capital of a company limited by shares as set forth in the legal regulations on accounting.
(3) In addition to interest, owners of interest-bearing shares shall be entitled to all rights attached to the shares, including the right to dividends.
Own Shares
Section 189.
(1) A company limited by shares may acquire its own shares (hereinafter referred to as "own share") from its assets in excess of share capital according to the conditions contained in Subsections (2)-(6). Shares must not be acquired if the face value or issue value thereof is not paid up.
(2) The sum of the joint face value of own shares held by a company limited by shares may not exceed:
a) ten per cent of the share capital for a close company,
b) five per cent of the share capital for a public company.
(3) For the calculation pursuant to Subsection (2), as well as from the point of view of suspending the exercise of voting rights, those shares shall also be considered whose holder acts in his own name but for the benefit of the company limited by shares, as well as shares issued by the company which the company received as security for its outstanding claims.
(4) Decisions on the acquisition of own shares, including the number of shares, and the decision on the consideration to be paid for such shares, shall fall within the competence of the general meeting, unless the own shares are acquired in order to avoid severe damage threatening the company. In such cases, the board of directors shall provide information on the acquisition of the own shares and the causes thereof at the forthcoming general meeting.
(5) A company limited by shares may not exercise voting rights on the basis of the own shares acquired, and shall alienate such shares within a period of one year. A company limited by shares may not assume direct suretyship in connection with the acquisition of the shares by third parties, nor may such company grant a credit to third parties to acquire the shares. If a company limited by shares fails to satisfy its obligation of alienation, it shall be required to withdraw the shares with a simultaneous reduction of its share capital.
(6) Alienation of own shares shall fall within the duties of the board of directors. If, on the basis of Section 202, prior consent is necessary to alienate the own shares, granting of such consent shall fall within the competence of the supervisory board.
Share Warrants and Interim Shares
Section 190.
Prior to entry of a company limited by shares into the register of companies, share warrants may be issued on the amounts of contribution provided by shareholders. Share warrants are non-transferable bearer documents. Unless there is evidence to the contrary, share warrants certify the rights and obligations of the person indicated in such documents existing in respect of the company limited by shares.
Section 191.
(1) Following court registration of the foundation of a company limited by shares, interim shares shall be made out for the amount of contribution provided on shares subscribed or undertaken to be received by shareholders, for the period up to the full payment of the share capital (increased share capital) or the issue value of the shares. Interim shares are securities, to which the regulations on registered shares shall be applied whereby the transfer of interim shares shall become valid only upon the registration of the holder of such shares in the register of shareholders.
(2) With the interim shares, shareholders may exercise their shareholders" rights in proportion to the contribution which they have already provided.
(3) With the exception of the contents of Section 194, interim shares shall indicate the amount paid by their holders up until the issue of such interim shares. Following the issue of interim shares, upon the request of shareholders, the amount of further contributions provided by them shall be indicated on the interim shares according to regulations on securities, or new interim shares shall be issued, together with a simultaneous declaration that the older interim shares are invalid.
(4) If a shareholder transfers his interim shares to third parties, such shareholder shall be liable for the debts arising from their contributions to be provided on the shares subscribed or undertaken to be received by them as parties assuming direct surety.
(5) Interim shares issued prior to registration of the company limited by shares, or in a value exceeding contributions which were actually provided shall be null and void.
(6) Upon the production of the shares, the board of directors shall call upon shareholders to submit their shares, applying the procedure contained in Section 263 correspondingly. Following the deadline indicated in such request, the interim shares shall be declared invalid, or destroyed by the company limited by shares.
Section 192.
The members of the board of directors shall bear joint and several liability for any damages caused by violation of the provisions of Sections 190-191.
Production of Shares
Section 193.
(1) Shares shall be produced and registered as printed share certificates or uncertificated shares, in compliance with the regulations on securities.
(2) Printed share certificates may be transformed into uncertificated shares. The detailed rules on such transformation are contained in the statutory provisions on securities.
Section 194.
(1) Printed share certificates shall contain at least the following information:
a) the company name and registered office of the company limited by shares;
b) the serial number, series, type and face value of the share;
c) the rights attached to the category of shares or class of shares in question, as set forth in the statutes;
d) the date of issue, the amount of the share capital, and the number of shares issued;
e) the signatures of two of the members of the board of directors;
f) the code of the security;
g) in the case of restriction on the transfer of the share, or making the same subject to the consent of the company limited by shares, the content of such restriction or the company"s right of consent.
(2) The provisions of Subsection (1) shall be applied to uncertificated shares with the deviations that the serial number of the share need not be indicated, and the signatures of the persons set forth under Paragraph e) shall, in accordance with the statutory provisions on securities, be indicated on the document issued by the issuer and placed in the central depository. In lieu of such signatures, uncertificated shares contain the names of the authorized signatories of the document.
Section 195.
(1) Shareholders may demand the disbursement of printed share certificates due to them, or the crediting of the uncertificated shares to their securities account following entry of the company limited by shares in the register of companies, and the full payment of the share capital or, if the face value and issue value of the shares differ, the issue value of the shares.
(2) Within a period of thirty days after fulfillment of the conditions contained in Subsection (1), a company limited by shares shall take measures to produce the shares without delay, even if such action has not been demanded by shareholders.
Section 196.
Shares issued prior to entry of the company limited by shares into the register of companies, or full payment of the issue value of the shares shall be null and void.
Section 197.
(1) Based on the authorization of the deed of foundation (statutes), shares belonging to one series of shares may also be issued as shares of consolidated denomination, furthermore, following issue of such, the shares may be transformed into shares of consolidated denomination upon the request and at the cost of shareholders. Unless there is an agreement to the contrary, the transformation of shares into shares of consolidated denomination shall not create joint property, and shareholders shall freely dispose over their rights attached to the base denomination of the consolidated shares according to the statutory provisions on securities.
(2) Upon the request and at the cost of shareholders, shares of consolidated denomination may be divided into consolidated shares of smaller denomination at a later point in time, or into the shares with the face value defined in the statutes for the series of shares in question.
Register of Shareholders
Section 198.
(1) The board of directors of a company limited by shares or a party commissioned by it according to the statutory regulations on securities shall keep a register of the shareholders holding registered shares, including holders of interim shares, in which the following shall be recorded: the name (company) and domicile (registered office) of shareholders or shareholders" representatives (hereinafter referred to jointly as "shareholders"), or in the case of jointly owned shares, the name (company) and domicile (registered office) of the joint representative, furthermore, the number of shares or interim shares (ownership ratio) of shareholders as per each series of shares, as well as any other data set forth by law or the deed of foundation (statutes) of the company.
(2) The transfer of registered shares shall be valid in respect of the company limited by shares, and shareholders may exercise their shareholders" rights in respect of the company only if such shareholders have been entered into the register of shareholders.
(3) Shareholders, if previously entered into the register of shareholders, shall report the transfer of their shares to the company within eight days after such transfer. On the basis of such report, the keeper of the register of shareholders shall provide for the cancellation of the shareholder from the register of shareholders without delay. The canceled data, however, shall remain observable. If shareholders fail to meet their disclosure obligation, they shall be obliged to pay a penalty calculated according to the provisions of the deed of foundation (statutes) to the company.
(4) The following parties may not be entered into the register of shareholders:
a) parties who have stipulated to this effect on the basis of the statutory provisions on securities;
b) parties who have acquired their shares in violation of the regulations on the transfer of shares set forth by law or the deed of foundation.
(5) With the exception contained in Subsection (4), the board of directors or the party commissioned by it may not refuse the entry into the register of shareholders if the shares have been transferred in accordance with the conditions set forth in this Act (Section 180).
(6) Shareholders may inspect the register of shareholders, and may request a copy of the section thereof concerning themselves from the board of directors or the party commissioned by it. The register of shareholders may be inspected by third parties, if their interest is rendered probable.
Convertible Bonds and Bonds with Subscription Rights
Section 199.
(1) A company limited by shares may issue up to half of its share capital in registered bonds, which shall be converted into shares at the request of the holder (convertible bonds).
(2) A company limited by shares may also decide to issue such registered bonds which, at a later point in time, upon the increase of the share capital through the issue of new shares, entitle holders of such, following shareholders, to the right of subscription (bonds with subscription rights).
(3) The provisions on convertible bonds and bonds with subscription rights shall be set forth in the deed of foundation (statutes).
Title 3.
Special Regulations on the Transfr of Shares
Section 200.
(1) Pre-emption rights or redemption rights attached to printed registered share certificates, as well as the right or obligation of purchase shall be valid in respect of the company limited by shares or third parties only if such rights have been indicated on the share certificates by overstamping.
(2) The board of directors shall act in connection with the overstamping upon the notice of shareholders.
Section 201.
(1) The deed of foundation of a close company may restrict the categories or classes of shares to be acquired by certain persons by way of the transfer.
(2) The law may restrict the acquisition of shares through transfer above and beyond the provisions contained in Subsection (1).
Section 202.
(1) The deed of foundation of a close company may stipulate that the transfer of registered shares be subject to the consent (Section 215 of the Civil Code) of the company.
(2) Granting the consent required by the deed of foundation for the transfer of registered shares shall fall within the competence of the board of directors, and in the case set forth in Subsection (6) of Section 189, within the competence of the supervisory board.
(3) Such consent may be refused on substantial grounds, in particular, if
a) the shares in question are to be acquired by a competitor of the company, or
b) considering the purpose of the company and the circle of its shareholders, such refusal is justified by some other reason set forth in the deed of foundation.
(4) If the board of directors fails to make a statement within a period of thirty days after receipt of the announcement of the intention to transfer the shares in writing, consent shall be considered to have been granted.
Title 4.
Foundation of Companies Limited by Shares
Section 203.
(1) The share capital of a company limited by shares may not be less than twenty million HUF.
(2) Upon foundation, the amount of contributions in cash may not be less than thirty per cent of the share capital or ten million HUF.
Section 204.
A company limited by shares may be founded privately (Section 206) or by public procedure (Section 212).
Section 205.
(1) A company limited by shares may not grant credit or undertake suretyship in order for third parties to acquire shares issued by the company limited by shares.
(2) The prohibition contained in Subsection (1) shall not apply to the issue of employees" shares, or the issue or transfer of registered shares for the employees of the company under the preferential conditions set forth in the statutory provisions on securities.
Private Foundation
Section 206.
(1) In the course of private foundation, the founders undertake to receive all shares of the close company.
(2) Founders shall provide for the foundation of the company limited by shares, and their obligation to receive the shares, as well as for the organization and operation of the company in the deed of foundation.
Section 207.
(1) In addition to the items listed under Subsection (1) of Section 11, the following shall be defined in the deed of foundation:
a) the amount of share capital, the amount of cash contributions to be paid upon foundation, and the conditions for paying the face value or issue value of shares;
b) the declaration of the founders on their obligation to receive all shares, and on the division of the shares among themselves;
c) the number and face value or issue value of the shares to be issued upon foundation, the type of shares and the method of production, as well as the rules of transforming the shares into shares belonging to other types of shares;
d) the number of members of the board of directors, the name and domicile of the members of the first board of directors;
e) the number of members of the supervisory board, the name and domicile of the members of the first supervisory board;
f) the period of mandate of the auditor, and the name and domicile of the first auditor of the company limited by shares;
g) the method of signing for the company;
h) the method of calling general meetings, as well as the conditions and method of exercising voting rights;
i) the method of publishing announcements of the company;
j) the expected costs of foundation.
(2) If so required, the deed of foundation shall contain the following:
a) the object and value of in-kind contributions, the number and face value of shares to be received in exchange for such, the name (company) and domicile (registered office) of parties providing the contribution, and the name (company) and domicile (registered office) of the auditor responsible for preliminary valuation;
b) the rights attached to the individual categories and classes of shares, the possible restriction of certain rights attached to shares, the rules on transforming shares into shares belonging to other categories or classes of shares, as well as the number and face value or issue value of shares belonging to certain categories or classes of shares, as per each series of shares;
c) the series, number and face value of convertible bonds and bonds with subscription rights to be issued upon foundation or thereafter, and the rules related to bonds;
d) the authorization of the board of directors to increase the share capital, specifying the maximum amount of share capital increase to be implemented by the board of directors;
e) the authorization of the board of directors to issue, and to divide consolidated shares;
f) any restriction on the transfer of registered shares, or making transfer subject to the consent of the company,
g) any other points for which the shareholders wish to provide in the deed of foundation.
Section 208.
(1) In the event that a contribution is provided in kind, the auditor"s report shall be attached to the deed of foundation, which shall contain a description and valuation of such contribution, and related thereto, a statement by the auditor as to whether the value of such contribution complies with the number and face value of the shares to be received in exchange, as well as a description of the valuation considerations applied by the auditor.
(2) A contribution in kind constituting a part of the subscribed capital may be any marketable object of pecuniary value or intellectual work, or any right representing pecuniary value. Only such objects subject to execution, intellectual works or rights may be taken into account as a contribution in kind which may be subsequently transferred by the company limited by shares without the consent (permission) of a third party. A permission granted upon the provision of the contribution in kind shall qualify as such a case.
(3) The auditor"s report shall be forwarded to the court of registration together with the deed of foundation.
Section 209.
Founders shall identify those arguments and facts in a written statement attached to the deed of foundation, on the basis of which they have established the value of their contribution in kind, in the event that such value is lower then the value established by the auditor.
Section 210.
The provisions of Sections 208-209 shall also be applied in the course of any increases in share capital via contributions in kind.
Section 211.
A company limited by shares may be registered only if, prior to the submission of the application for registration,
a) the founders who have undertaken to provide contributions in cash have paid at least thirty per cent of the face value or issue value of the shares undertaken to be received in the deed of foundation, but an amount of at least ten million HUF in total,
b) contributions in kind have been made available to the company.
Public Foundation
Section 212.
(1) A public company limited by shares may be founded by means of share subscription through public procedure, according to the conditions set forth in the statutory provisions on securities.
(2) Share subscriptions shall take place in accordance with the memorandum, and according to the method contained therein. The original of the memorandum shall be drawn up in a notarial document or private document representing conclusive evidence, and any copies thereof shall be certified by a notary public.
(3) The following shall be defined in the memorandum:
a) the company name, registered office, scope of activities and duration of the company;
b) the name (company names) and domicile (registered office) of founders;
c) the planned amount of share capital;
d) the type, number and face value of shares, the method of production, and, if so required, the rights attached to the shares, other than ordinary shares, to be issued, and to the individual classes of shares, as well as possible restriction of shareholders" rights;
e) if so required, the benefits granted to founders, that is, with due consideration of the contents of Sections 208-209, the right to provide contribution in kind, to appoint the board of directors, the members of the supervisory board and the auditor for the first three years, and to render decision on the approval or refusal of oversubscription;
f) the objects and values of contributions in kind, the number and face value of shares to be subscribed in exchange for such, the name (company) and domicile (registered office) of parties providing such contributions, and the name (company) and domicile (registered office) of the auditor responsible for preliminary valuations;
g) procedures to be followed in the event of oversubscription;
h) if so required, the number of shares necessary for the share subscription to be successful, if the share capital is undersubscribed (minimum subscription);
i) the method of calling the statutory general meeting;
j) the expected costs of the public foundation.
(4) The memorandum shall be published by the founders as a part of the prospectus prepared according to the statutory provisions on securities.
Section 213.
Shares are subscribed by signing the subscription sheet. With the exception of founders providing contributions in kind, subscribers shall pay upon subscription at least ten per cent of the amount subscribed, in the manner determined by the founders.
Section 214.
(1) If more shares have been subscribed than are being issued by the company according to the memorandum (oversubscription), the founders, if entitled thereto in the memorandum, shall decide on the approval or refusal of the oversubscription according to the considerations set forth in the memorandum. If founders are not authorized to decide on oversubscription by the memorandum, following the establishment of the share capital, the statutory general meeting shall decide on the approval or refusal of the surplus subscription.
(2) Oversubscription must be refused if the face value of the shares subscribed exceeds the maximum issue value as established in the statutory provisions on securities.
(3) If the founders or the statutory general meeting have refused the oversubscription, payments performed on the share subscriptions refused shall be repaid without any deduction to the subscribers within a period of fifteen days after the decision to refuse the oversubscription. The founders and the investment enterprise participating in the share issue shall bear joint and several liability for the fulfillment of this obligation.
Section 215.
(1) Foundation shall be considered to have failed if all shares representing the planned share capital of the company limited by shares, or, if so provided by the memorandum, shares equivalent to the minimum subscription have not been subscribed before the closing date of the share subscription, unless the share subscription is secured by a subscription guarantee.
(2) In the event that shares equivalent to only the minimum subscription have been subscribed in the course of the share subscription, the share capital of the company limited by shares shall be established based on the sum of the face value of the shares subscribed.
(3) If foundation fails, the amount paid in the course of the share subscription shall be repaid without any deduction to the parties performing such payment within a period of fifteen days. The founders and the investment enterprise participating in the share issue shall bear joint and several liability for the fulfillment of this obligation.
Section 216.
(1) Founders shall hold the statutory general meeting within a period of sixty days after the closing date of successful share subscription.
(2) If the founders fail to hold the statutory general meeting within the period of time stipulated in Subsection (1), subscribers shall be relieved from their further obligations, and may reclaim the amount they have paid. The founders shall bear joint and several liability for repayment of such amount without any deductions.
(3) Until the opening of the statutory general meeting, subscribers shall supplement the amount paid by them upon subscription to thirty per cent of the face value or issue value of the shares subscribed by them, so that at least ten million HUF in cash contributions are available.
Section 217.
The statutory general meeting shall:
a) determine the success of the share subscription;
b) decide on the approval or refusal of oversubscription, unless this right has been reserved for founders in the memorandum;
c) establish the statutes;
d) elect the first board of directors, supervisory board and auditor, unless this right has been reserved for founders in the memorandum.
Section 218.
(1) When stating whether a quorum is present at the statutory general meeting, from among the subscribers undertaking to provide contributions in cash, those may be taken into account who have satisfied the obligation under Subsection (3) of Section 216, whereas from among the founders undertaking to provide contributions in kind, those may be taken into account who have made their contribution in kind available to the company. With the exception of issues deviating from the memorandum, the statutory general meeting has quorum if shareholders subscribing fifty per cent or more of the share capital are present.
(2) The statutory general meeting shall pass resolutions by a simple majority of the votes. The statutory general meeting may deviate from the memorandum only with the unanimous decision of all shareholders.
(3) Minutes shall be drawn up on the statutory general meeting, to which the provisions of Section 239 shall apply.
Section 219.
(1) The statutes approved by the statutory general meeting shall contain the items listed under Section 207.
(2) Contributions in kind shall be made available to the company prior to the submission of the application for registration.
Title 5.
Rights and Obligations of Shareholders
General Provisions
Section 220.
(1) Shareholders in possession of the shares, or the certificate of deposit or certificate of ownership set forth in the statutory provisions on securities, and for registered shares, following entry into the register of shareholders shall be entitled to the exercise the rights set forth in this Chapter.
(2) One share may have several owners who shall qualify as one shareholder in respect of the company limited by shares; their rights may only be exercised by their joint representative and they shall bear joint and several liability for the obligations due from such shareholders.
(3) Shareholders holding shares belonging to the same series of shares shall not be discriminated against in any way in connection with the exercise of their shareholders" rights.
(4) Shareholders" representatives acting on the basis of the statutory provisions on securities shall exercise shareholders" rights in respect of the company in their own name and for the benefit of the shareholder.
Section 221.
(1) Shareholders may exercise their shareholders" rights through representatives. Members of the board of directors, the general director, the supervisory board members or the auditor may not be representatives.
(2) One representative may represent several shareholders, but one shareholder may have only one representative.
(3) Authorizations for representation may be valid for one general meeting or a definite period of time, but for a period of twelve months at the most. The validity of authorizations of representation shall extend to the resumption of suspended general meetings and to general meetings re-convened due to lack of quorum.
(4) Authorizations shall be submitted to the company limited by shares in the form of a notarial document or private document representing conclusive evidence.
Obligations of Shareholders
Section 222.
(1) Shareholders are obliged to pay the full amount of the face value or issue value of their shares within a period of one year following entry of the company limited by shares into the register of companies, as well as to make available their contribution in kind before the submission of the application for registration of the company. With the exception of a reduction of share capital occurring in the meantime, shareholders may not be exempted from this obligation.
(2) Within the deadline set forth in Subsection (1), shareholders are obliged to pay the face value or issue value of their shares when ordered to do so by the board of directors according to the conditions set forth in the deed of foundation (statutes). A public company shall publish such order in the publication for announcements of the company. Shareholders may satisfy their payment obligation prior to receiving an order to that effect.
(3) If the shareholders" rights of a shareholder are terminated pursuant to Section 13, and his obligation to provide the contribution on the shares subscribed, or undertaken to be received by the shareholder in the deed of foundation may not be assumed by third parties, the general meeting shall reduce the share capital in accordance with the contribution undertaken by such shareholder in default with regard to the share capital.
(4) The value of the contribution provided by shareholders in default shall be due to such shareholders following the reduction of the share capital, or when the shareholder replacing the shareholder in default performs his contribution towards the company.
Provisions on the Maintenance of Share Capital
Section 223.
(1) During the existence of a company limited by shares, shareholders may not reclaim contributions they have provided. With the exception of the reduction of share capital, payments to the debit of share capital shall not be made to shareholders on the basis of their membership.
(2) Payments performed contrary to the provisions of Subsection (1), with the exception of dividends received in good faith and interest paid on interest-bearing shares, shall be repaid to the company.
Section 224.
(1) Prior consent of the supervisory board shall be required for contracts to be concluded between the company limited by shares and one of its shareholders holding registered shares or his close relatives [Paragraph b) of Section 685 of the Civil Code].
(2) For a public company, the provisions of Subsection (1) shall be applied with relation to shareholders having voting rights of ten per cent or more in the share capital of the public company, or close relatives of such persons.
(3) Consent of the general meeting shall be required for commutative contracts on the transfer of property to be concluded between the company limited by shares and one of its shareholders or his close relatives, if the value of the compensation set forth in such contract exceeds one-tenth of the share capital of the company. In the course thereof, the provisions on the valuation of contributions in kind, and on the publication of the auditor"s report (Sections 208-209) shall also be applied correspondingly.
(4) If a shareholder is a member of the board of directors or the supervisory board of the company limited by shares at the same time, neither he nor his close relatives may, unless otherwise provided by law, conclude a contract with the company falling within the business-like economic activities of the company.
Section 225.
(1) Shareholders are entitled to the proportionate share according to the face value of their shares of after-tax profits of the company limited by shares calculated according to the legal regulations on accounting, which has been ordered to be distributed by the general meeting (dividends). Shareholders are entitled to dividends only in proportion to the contributions which they have already provided.
(2) The provisions of Subsection (1) may be applied with due consideration of the special rights or restrictions set forth in the deed of foundation (statutes) for the individual classes of shares.
(3) Upon the proposal of the board of directors, approved by the supervisory board, the general meeting may pass a resolution on the payment of dividends simultaneously upon the approval of the report prepared pursuant to the Accounting Act. No dividends may be paid if as a result of this, the equity of the company limited by shares does not reach the share capital of a company limited by shares as set forth in the legal regulations on accounting.
Section 226.
(1) Prior to the approval of the report prepared pursuant to the Accounting Act, interim dividends may be paid if, on the basis of the interim balance sheet prepared according to the provisions of the Accounting Act, and approved by the general meeting, it is highly likely that there will be no obstacle to paying dividends at year end pursuant to the contents of Section 225, whereby the joint amount of interim dividends and the dividends paid during the year in question may not exceed after-tax profits of the company limited by shares which may be appropriated to dividends, as calculated pursuant to the provisions of the Accounting Act, following the year prior to the year under review.
(2) Interim dividends may be paid pursuant to Subsection (1) only if shareholders undertake to repay the interim dividends in the event that it is later found that, according to the report prepared pursuant to the Accounting Act, the payment of the interim dividends was not possible according to legal regulations.
(3) Shareholders may not be obliged to repay dividends or interim dividends received in good faith, or interest paid on interest-bearing shares.
Rights of Shareholders at the General Meeting
Section 227.
All shareholders are entitled to participate, to request information and to make remarks at the general meeting. Shareholders are entitled to make proposals and, if holding shares with voting rights, to vote.
Section 228.
(1) The board of directors shall provide the necessary information to all shareholders in connection with the items placed on the agenda of the general meeting, in the case of a close company, upon the discussion of the item, whereas for a public company, upon the request of shareholders submitted at least eight days in advance of the date of the general meeting. The board of directors may deny such information only if, in its opinion, provision of such would infringe upon the business secrets of the company. The information shall be provided even in this case if a resolution of the general meeting obliges the board of directors thereto.
(2) Substantial data contained in the report prepared pursuant to the Accounting Act, and in the report of the board of directors and the supervisory board shall be communicated to the shareholders by the board of directors of a close company at least fifteen days in advance of the general meeting.
(3) A public company shall publish the documents set forth in Subsection (2) at least fifteen days in advance of the general meeting in accordance with the provisions of the statutes on the publication of announcements by companies limited by shares.
Section 229.
(1) With the exceptions set forth in this Act, voting rights attached to shares shall be determined by the face value of such shares.
(2) For registered shares, the statutes of a public company may stipulate the maximum level of voting rights which may be exercised by a single shareholder. When establishing maximum voting rights, shareholders must not be discriminated against in any way.
(3) Within the framework of this Act and the statutory regulations on securities, the method of exercising voting rights shall be set forth in the deed of foundation (statutes). The statutes of a public company may stipulate that shareholders of registered shares may exercise their voting rights only if entered into the register of shareholders at least sixty days in advance of the date of the general meeting.
(4) Shareholders may not exercise their voting rights until they provide cash contributions which are due (Section 222).
Section 230.
(1) Shares representing one-tenth or more of the votes may, indicating the reason thereof, request the board of directors in writing that a certain issue be placed on the agenda. The deed of foundation (statutes) may grant this right to shareholders representing the smallest possible proportion of the votes.
(2) Shareholders may exercise their rights under Subsection (1) within a period of eight days after receipt of the invitation to the general meeting, or the publication of the announcement on calling the general meeting.
Section 231.
In accordance with the proposal under Subsection (1) of Section 51, the board of directors shall be obliged to call the general meeting without delay, but within a period of thirty days at the latest, as well as to put the proposal pursuant to Subsections (3) and (5) of Section 51 on the agenda and to publish such proposal in the same way as the announcement of the general meeting. If the board of directors fails to comply with this obligation, the provisions of Section 51 shall be applied.
Title 6.
Organizations of Companies Limited by Shares
General Meeting
Section 232.
The supreme body of a company limited by shares is the general meeting, which consists of all shareholders.
Section 233.
The following shall fall within the exclusive competence of the general meeting:
a) establishment and alteration of the deed of foundation (statutes);
b) decision on the change of the form of the company limited by shares;
c) decision on transformation or termination without legal successor of the company;
d) with the exception contained in Section 33, the election and removal of the members of the board of directors, members of the supervisory board and the auditor, and the establishment of their remuneration;
e) approval of the report prepared pursuant to the Accounting Act, including the decision on the appropriation of after-tax profits;
f) decision to pay interim dividends;
g) decision on the transformation of types of shares;
h) decision to transform printed share certificates into uncertificated shares;
i) variation of the rights attached to the individual series of shares, and the transformation of categories or classes of shares;
j) decision on the issue of convertible bonds or bonds with subscription rights;
k) decision on the acquisition of own shares, unless otherwise provided by this Act, furthermore, in the case of a public company, on the acceptance of a public offer for purchase received in respect of own shares;
l) decision on all issues which are assigned to the competence of the general meeting by the law or the deed of foundation (statutes).
Section 234.
(1) The general meeting shall be convened as frequently as set forth in the deed of foundation (statutes), but at least once every year. If so required, extraordinary general meetings may be held at any time.
(2) Unless otherwise provided by this Act, the general meeting shall be called by the board of directors.
(3) The general meeting shall be called according to the method set forth in the deed of foundation (statutes), in the case of a close company, by means of invitations sent to the shareholders at least fifteen days in advance of the first day of the general meeting, whereas in the case of a public company, by means of the announcement published according to the provisions of the statutes at least thirty days in advance of the first day of the general meeting.
(4) Such invitation or announcement shall contain the following:
a) the company name and registered office of the company;
b) the place and time of the general meeting;
c) the agenda of the general meeting;
d) the conditions for exercising voting rights, as stipulated in the statutes;
e) the place and time of the repeated general meeting in the event of failure to have quorum.
(5) A general meeting repeated due to lack of quorum shall be convened within the deadline set forth in the invitation or announcement of the original general meeting, and under the conditions contained therein.
(6) If the general meeting has been called in violation of the rules, it may pass resolutions only in the presence of all shareholders entitled to vote, and only if none of the shareholders has protested against the general meeting being held.
Section 235.
(1) The shareholders present at the general meeting shall be entered into an attendance sheet, which shall contain the name (company) and domicile (registered office) of the shareholder or its representative, the number of his shares, and the number of votes he has.
(2) Attendance sheets shall be confirmed by the chairman of the general meeting and the keeper of the minutes through their signatures.
Section 236.
(1) The general meeting has quorum if shareholders representing more than half of the votes embodied by shares with voting rights are present. The deed of foundation (statutes) may stipulate a higher rate of participation.
(2) If the general meeting fails to have quorum, the repeated general meeting shall, unless otherwise provided by the deed of foundation (statutes), have quorum on the issues of the original agenda irrespective of the number of those present.
(3) If the general meeting is suspended, it shall be resumed within a period of thirty days. In this case, the rules on calling the general meeting and on the election of the officers of the general meeting need not be applied. General meetings may be suspended only on one occasion.
Section 237.
(1) The general meeting shall pass resolutions on the issues listed under Paragraphs a)-c) and i) of Section 233 by a majority of at least three-quarters of the votes adopting the draft resolution.
(2) The deed of foundation (statutes) may stipulate that resolutions be passed by a majority of three-quarters or more of the votes on issues other than the issues listed under Subsection (1).
Section 238.
(1) Resolutions of the general meeting which discriminate against the rights attached to a certain series of shares may be passed only if, according to the procedure set forth in the deed of foundation (statutes), a majority of at least three-quarters of the shareholders of the series of shares in question consent thereto in advance. In the course thereof, the provisions on the possible restriction or exclusion of voting rights attached to such shares may not be applied.
(2) A resolution of the general meeting aiming at the change of the form of a public company may be passed only if, according to the procedure set forth in the deed of foundation (statutes), a majority of at least three-quarters of the shareholders representing at most one percent each of the votes consent thereto in advance.
Section 239.
(1) Minutes of the general meeting shall be drawn up, which shall contain the following:
a) the company name and registered office of the company;
b) the place and time of the general meeting;
c) the name of the chairman of the general meeting, the keeper of the minutes, the person in charge of confirming the minutes and the official vote counters;
d) significant events and proposals made during the general meeting;
e) draft resolutions, the number of votes cast for and against draft resolutions, and the number of abstentions from the vote.
(2) The minutes shall be signed by the keeper of the minutes and the chairman of the general meeting, and shall be confirmed by a shareholder being present and elected as the person in charge thereof.
(3) A certified copy of the minutes of the general meeting or an abstract thereof, the attendance sheet, and one copy of the publication containing the announcement on calling the general meeting shall be submitted to the court of registration by the board of directors within a period of thirty days after the end of the general meeting.
(4) Any shareholder may request an abstract or copy of the minutes of general meetings from the board of directors.
Board of Directors
Section 240.
(1) The management body of a company limited by shares is the board of directors.
(2) The board of directors shall consist of at least three and at most eleven members who shall be natural persons. The board of directors shall elect its chairman from among its members. The office of the chairman or that of the members of the board of directors may not be carried out within the framework of an employment relationship.
Section 241.
(1) The board of directors shall exercise its rights and perform its duties as an independent body. The rules of procedure approved by the board of directors shall provide for the division of tasks and competence among the members of the board of directors.
(2) The members of the board of directors shall take part in the general meeting of the company with a right of consultation.
Section 242.
(1) Introduction of the report of the company limited by shares prepared pursuant to the Accounting Act, and of the proposal on the appropriation of after-tax profits shall be the duty of the board of directors.
(2) The board of directors shall prepare a report on the management, the financial situation and the business policy of the company at the regular intervals set forth in the deed of foundation (statutes), but at least once every year for the general meeting, and at least once every three months for the supervisory board.
(3) The board of directors shall ensure that the books of the company are kept according to the rules.
Section 243.
(1) The board of directors shall, with simultaneous notice to the supervisory board, call a general meeting within a period of eight days in order to take necessary measures, if it learns that
a) due to losses, the equity of the company has decreased to two-thirds of the share capital, or
b) the equity of the company has decreased below the amount set forth in Subsection (1) of Section 203, or
c) the company has stopped payment and its assets do not cover its debts.
(2) If the general meeting is called due to a reason set forth in Paragraph a) of Subsection (1), the general meeting shall, within the limits contained in Subsection (1) of Section 258, pass a resolution on the reduction of the share capital of the company.
Section 244.
The deed of foundation of a close company may provide that no board of directors be elected, and the rights of the board of directors as set forth in this Act be exercised by a general director.
Title 7.
Increase of Share Capital
Joint Regulations on the Increase of Share Capital
Section 245.
(1) Share capital may be increased
a) by the issue of new shares,
b) to the debit of assets in excess of share capital,
c) by the issue of employees" shares,
d) by the issue of convertible bonds, as conditional increase of the share capital.
(2) New shares or bonds may be issued publicly or privately.
(3) The types and methods of increasing the share capital under Subsections (1)-(2) may be decided on and implemented at the same time.
Section 246.
(1) The deed of foundation (statutes) may authorize the board of directors to increase the share capital. In the course thereof, the highest possible amount shall be established with which the board of directors is authorized to increase the share capital. Such a renewable authorization may be valid for a period of five years or less, and for a share capital increase of twenty-five per cent or less.
(2) In the case set forth in Subsection (1), the board of directors shall be entitled as well as obliged to alter the deed of foundation (statutes) of the company.
Section 247.
The rules applicable to foundation shall be applied correspondingly in the course of the share capital increase and the entry thereof into the register of companies, whereby if the issue value of the shares exceeds the face value upon the share capital increase, the difference shall be paid up in full upon the share subscription.
Share Capital Increase through the Issue of New Shares
Section 248.
A company limited by shares may increase its share capital through the issue of new shares only if the face value or issue value of all shares issued previously has been paid up in full.
Section 249.
(1) In the announcement or invitation calling the general meeting deciding on the increase of the share capital through the issue of new shares, in addition to the items listed under Subsection (4) of Section 234, the following shall also be defined:
a) the method of increasing the share capital;
b) the planned lowest amount of the share capital increase (minimum subscription);
c) the draft alteration of the deed of foundation (statutes) related to the share capital increase, including the number and series of the new shares to be issued, the rights attached to the types of shares or classes of shares belonging to such series, the method of production, the face value or issue value of the shares, as well as the conditions of payment;
d) in the case of the private issue of new shares, if so required, the objects and values of contributions in kind, the number and face value of shares to be received in exchange for such, the name (company) and domicile (registered office) of parties providing such contributions, and the name (company) and domicile (registered office) of the auditor responsible for preliminary valuation.
(2) In the resolution of the general meeting on the increase of the share capital through the issue of new shares, decisions shall be made on the items listed under Subsection (1) and, in the case of public issue, on the procedure to be followed in the event of oversubscription.
(3) If shares belonging to a different series of shares are issued, the resolution of the general meeting related to the increase of the share capital may be passed only if, according to the procedure set forth in the deed of foundation (statutes), a majority of at least three-quarters of the shareholders of the series of shares concerned in the share capital increase consent thereto in advance. In the course thereof, the provisions on the possible restriction or exclusion of voting rights attached to such shares may not be applied.
(4) Unless otherwise provided by the general meeting deciding on the share capital increase, the new shares issued through the increase of the share capital shall entitle their holder to dividends on the basis of the calendar year of the registration of the share capital increase for the first time.
Section 250.
If the share capital is increased through a private issue of shares, those persons, who, with due consideration of the declaration of purchase intent made by them, are authorized by the general meeting to undertake obligations related to the receipt of the shares, shall be specified in the resolution of the general meeting on the increase of the share capital. In such resolution, the type or class of shares, the number, the series as well as the face value or issue value of the shares undertaken to be received by the same persons shall be provided for.
Section 251.
(1) The share capital may be increased through the issue of new shares in the cases and according to the conditions set forth in the statutory provisions on securities.
(2) In the course of the increase of the share capital through the public issue of new shares, the shareholders of the company limited by shares, and within that, in the first place, the shareholders with shares belonging to the same series of shares as the shares being issued, and the holders of bonds with subscription rights shall, in this order, be entitled to subscription priority according to the conditions set forth in the statutes or the resolution of the general meeting based on the authorization of the statutes.
Section 252.
(1) The general meeting deciding on the increase of the share capital may alter the deed of foundation (statutes) in connection with the share capital increase depending on the success of the share subscription or the obligations to receive the shares, at the date of the actual closing thereof (conditional alteration of statutes). In this case, an additional general meeting need not be held in connection with the share capital increase.
(2) If a conditional alteration of the statutes is not effected, or if, in the course of the share capital increase, the general meeting must pass a resolution on an issue, which the conditional alteration of the statues has failed to provide for, a general meeting shall be held on the alteration of the deed of foundation (statutes) within a period of sixty days after successful closure of the share subscription.
(3) The share capital increase shall be considered to have failed if, in the course of the increase of the share capital through the public issue of new shares, the conditions set forth in Subsections (1)-(2) of Section 215 are not fulfilled, or, in the course of a private issue of new shares, the persons indicated in the resolution of the general meeting have not undertaken to receive the minimum amount of shares set forth in such resolution.
(4) Failure of the share capital increase shall be reported to the court of registration within a period of thirty days after the expiration of the deadline stipulated for the performance of the share subscription or the obligations to receive the shares.
Share Capital Increase to the Debit of Assets in Excess of Share Capital
Section 253.
(1) At the general meeting approving the report prepared pursuant to the Accounting Act, a company limited by shares may increase its share capital by its assets in excess of share capital, or a part thereof, by way of alteration of the deed of foundation (statutes).
(2) With the exceptions contained in Subsection (3), the shareholders of the company limited by shares shall be entitled to the shares falling on the increased share capital without compensation, in proportion to the face value of their shares.
(3) In its resolution on the share capital increase, the general meeting may provide that the new shares issued to the debit of the increased share capital, or a part thereof
a) shall be due to the employees of the company as employees" shares, or
b) shall be due to the person who, in exchange for such shares, agrees to waive the claim to his loan granted to the company.
(4) In addition to the alteration of the deed of foundation (statutes), the form of implementing the share capital increase (issue of new shares, overstamping or exchange of shares) and the rules of implementing the same shall be set forth in the resolution of the general meeting.
Section 254.
(1) In respect of printed share certificates, within a period of sixty days after registration of the share capital increase, the board of directors shall inform the shareholders, in the case of a close company, by means of a written notice, whereas in the case of a public company, by means of a notice published in the publication for announcements of the company, of the place and the opening and closing date of the acceptance of shares to be replaced, and the provision of new or overstamped share certificates.
(2) If share certificates to be overstamped or exchanged are not be submitted to the board of directors by a shareholder within the deadline set forth in the resolution of the general meeting, the board of directors shall declare such shares invalid, and shall publish its resolution to this effect in the Company Gazette and in the publication for announcements of the company. The shareholders" rights of the shareholders concerned shall extinguish with such a declaration of invalidity. In lieu of the shares declared invalid, the company shall issue and sell new shares. The purchase price so realized shall be due to the owners of the shares declared invalid.
(3) If new or overstamped share certificates are not accepted by a shareholder within the deadline set forth in the resolution of the general meeting, the company shall sell such shares. The purchase price so realized shall be due to the shareholder who missed the deadline.
(4) If the sale of shares pursuant to Subsections (2)-(3) does not take place within a period of six months, such shares shall be withdrawn with a simultaneous reduction of the share capital at the next general meeting at the latest.
Share Capital Increase through the Issue of Employees" Shares
Section 255.
(1) In the event of an issue of employees" shares free of charge, the face value of the employees" shares is provided by the increase of the share capital to the debit of the assets of the company in excess of share capital. In the event that the employees" shares are issued at a reduced price, the face value of the employees" shares issued is provided by the amount to be paid according to the resolution of the general meeting and the increase of the share capital to the debit of the assets in excess of share capital jointly.
(2) The provisions pertaining to share capital increase through the private issue of new shares shall be applicable to the issue of employees" shares, whereby upon the issue of employees" shares at a reduced price, the provisions contained in Section 247 be applied only if the amount of contribution granted by the company limited by shares to the debit of its assets in excess of share capital does not reach the amount specified by the general meeting, but at least thirty per cent of the face value.
Share Capital Increase through the Issue of Convertible Bonds
Section 256.
(1) The general meeting may resolve a conditional share capital increase through the issue of convertible bonds.
(2) In the resolution of the general meeting on the conditional share capital increase, the following shall be defined:
a) the method of bond issue (private, public);
b) the number, and face value or issue value of the bonds to be issued, the series of the bonds, and the place and time of subscription;
c) the conditions for transforming the bonds into shares;
d) the maturity of the bonds, and the conditions for paying interest or other yield on such bonds.
(3) In respect of private bond issues, in addition to the items listed under Subsection (2), the persons entitled to receive the bonds on the basis of the previously made declarations of intent shall be specified in the resolution of the general meeting, indicating the series, number, and face value or issue value of the bonds.
(4) The statutory provisions on securities shall also apply to the issue of convertible bonds.
Section 257.
(1) Within the maturity of the bonds, bond holders may demand in writing shares in exchange for their bonds within a period of time set forth by the general meeting, through the submission of such bonds to the board of directors. If the bonds were issued at an amount below the face value or issue value of the shares, simultaneously with their declaration, bond holders shall pay the difference between the bond and the face value or issue value of the share to the company limited by shares.
(2) The general meeting shall, at its meeting following the declaration pursuant to Subsection (1), and deciding on the approval of the report prepared pursuant to the Accounting Act, alter the deed of foundation (statutes) in accordance with the share capital increase.
Title 8.
Reduction of Share Capital
Section 258.
(1) The general meeting may decide to reduce the share capital, whereas in the cases set forth in this Act, the general meeting is obliged to reduce the share capital. The share capital may not be reduced below the amount set forth in Subsection (1) of Section 203.
(2) If the reduction of share capital is required by law, the provisions of Section 262 need not be applied.
(3) If the reduction of share capital prescribed by this Act is not possible because the share capital of the company limited by shares would fall below the minimum amount set forth in this Act, the general meeting shall resolve transformation of the company into some other form of business association, or termination of the company limited by shares without legal successor.
(4) In addition to the items listed under Subsection (4) of Section 234, the invitation or announcement calling the general meeting shall also contain information on the grounds and the method of implementation of the share capital reduction.
Section 259.
(1) In the resolution of the general meeting on the reduction of share capital, the following shall be defined:
a) the method of implementing the share capital reduction;
b) the fact whether the share capital is reduced in the interest of withdrawal of capital or the settlement of losses, or in order to increase another part of the equity of the company;
c) the amount by which the share capital is being reduced, and
d) the deadline by which shares are to be submitted to the company.
(2) Simultaneously upon its resolution on share capital reduction, the general meeting shall alter the deed of foundation (statutes).
(3) With the exception of a mandatory reduction of share capital as set forth in this Act, the resolution of the general meeting on share capital reduction may be passed only if, according to the procedure set forth in the deed of foundation (statutes), a majority of at least three-quarters of the shareholders of the series of shares concerned in the share capital reduction consent thereto in advance. In the course thereof, the provisions on the possible restriction or exclusion of voting rights attached to such shares may not be applied.
Section 260.
In the event of share capital reduction, own shares held by the company shall be withdrawn first.
Section 261.
In respect of printed share certificates, the share capital reduction may be implemented:
a) by exchanging the shares;
b) by stamping the shares;
c) by reducing the number of shares according to the procedure set forth in the deed of foundation (statutes).
Section 262.
(1) Following submission of the resolution of the general meeting on share capital reduction to the court of registration, the board of directors shall publish such resolution in the Company Gazette on two consecutive occasions, with an interval of thirty days or more. Simultaneously, creditors of the company limited by shares shall be notified in the announcement that claims of creditors disapproving the share capital reduction should be reported within a period of thirty days after the last publication of such announcement. Known creditors shall also be notified separately to make such a report.
(2) A company limited by shares is obliged to provide appropriate security for creditors acting pursuant to Subsection (1), or to satisfy such creditors in some other way.
(3) Reduction of share capital may be registered only if compliance with Subsections (1)-(2) is certified by the company limited by shares through the issues of the Company Gazette and a statement of the board of directors. Failure of the share capital reduction shall be reported to the court of registration.
Section 263.
(1) In respect of printed share certificates, within a period of thirty days after registration of the share capital reduction, the board of directors shall call upon the shareholders, in the case of a close company, by means of an announcement in writing, whereas in the case of a public company, by means of an announcement published in the publication for announcements of the company, to submit their shares prior to the deadline set forth in such announcement. The company shall declare invalid shares not submitted in spite of such announcement, and shall publish this fact in the Company Gazette. Shareholders" rights of the shareholders affected shall extinguish upon the declaration of invalidity.
(2) In exchange for shares declared invalid, if so required, the company limited by shares may issue and sell new shares. The purchase price so realized shall be due to the owners of shares which have been declared invalid. If the sale of such shares fails during a period of six months after the issue thereof, the share capital of the company shall be reduced.
Section 264.
Payments may not be made to shareholders to the debit of the share capital, or defaulted payments related to shares may not be canceled until entry of the share capital reduction in the register of companies.
Title 9.
Termination of Companies Limited by Shares
Section 265.
The general meeting of a company limited by shares may decide to terminate the company by a majority of three-quarters of the votes.
Section 266.
(1) In the event of termination of a company limited by shares through voluntary dissolution, following publication of the court of registration judgment on voluntary dissolution proceedings, the person in charge of voluntary dissolution himself shall publish an announcement on the voluntary dissolution in the Company Gazette, which shall contain the name and domicile of the person in charge of voluntary dissolution, as well as a notification to creditors that their claims should be reported to the person in charge of voluntary dissolution within a period forty days after the publication of such announcement.
(2) Simultaneously upon submission to the court of registration of the application for cancellation of the company, the person in charge of voluntary dissolution shall certify that publication pursuant to Subsection (1) has taken place.
(3) The assets of a company limited by shares undergoing voluntary dissolution may not be distributed until after cancellation of the company.
Section 267.
(1) In the event of termination of a company limited by shares without legal successor, unless otherwise provided by law, assets remaining after the satisfaction of creditors shall be distributed among shareholders on the basis of their payments and contributions in kind actually provided, in proportion to the face value of their shares. If the company has issued shares with preferred liquidation quota, the rights granted by such preference shares shall be taken into account when distributing the assets of the company.
(2) If, at the commencement of voluntary dissolution or upon order for liquidation, the share capital of the company limited by shares has not yet been paid up in full, the person in charge of voluntary dissolution or the liquidator shall have the right to make outstanding payments due with immediate effect, and to order the performance thereof by shareholders, if such action is necessary in order to satisfy the company"s debts.
Title 10.
Single-Man Companies Limited by Shares
Section 268.
(1) A company limited by shares may also be founded according to the rules of private foundation in such a manner that all shares are received by one person, the founder. A single-man company limited by shares may also be established in such a manner that the ownership rights of all shares of a company limited by shares which is already operating are acquired by a single shareholder.
(2) If the ownership rights of all shares of a public company are acquired by a single shareholder, the company shall continue to operate as a close company.
Section 269.
The share capital of a single-man company limited by shares shall be paid up in full prior to submission of the application for registration.
Section 270.
(1) In respect of single-man companies limited by shares, the shareholder shall resolve the issues falling within the competence of the general meeting in writing, of which he shall inform the executive officers.
(2) The same person may not be an executive officer or a member of the supervisory board of a single-man company limited by shares and, if such shareholder is an economic organization, its shareholder at the same point in time.
(3) In order for a contract concluded between a single-man company limited by shares and its shareholder to be valid, such contract shall be drawn up in writing.
Section 271.
(1) A single-man company limited by shares may not acquire its own shares.
(2) If the shareholder is an economic organization, a single-man company limited by shares may not acquire participation in the economic organization holding ownership rights, and shall alienate any existing participation therein within a period of one-hundred and eighty days after establishment of the single-man company limited by shares. Until such alienation, the shares owned by the single-man company limited by shares shall also be considered when conducting the calculation required under Subsection (2) of Section 189.
(3) The rules of liability related to controlling interest as set forth in Subsection (3) of Section 292 and Subsection (3) of Section 296 shall be applied correspondingly to the liability of the shareholder of a single-man company limited by shares. The provision on the prohibition of the enforcement of a permanently detrimental business policy may not be applied against the shareholder of a single-man company limited by shares in the event that the shareholder of the single-man company limited by shares has assumed unlimited, full liability for the debts of the single-man company limited by shares in the deed of foundation or in an alteration thereof.