About the joint-stock companies
THE LAW
OF TURKMENISTAN
Amendments to the Law of Turkmenistan
"About the joint-stock companies»
(The Mejlis of Turkmenistan Bulletins, 2015, № 1, art. 30)
I. To make the following changes to the Law of Turkmenistan "About the joint-stock companies", adopted on November 23, 1999 (The Mejlis of Turkmenistan Bulletins, 1999, No. 4, article 55; 2009, No. 2, article 33; 2012, No. 1, article 48):
1. In the text of the Law in the state language the words ustaw fondy, ustaw, ustawlar, ustaw gaznasy, täze redaksiýadaky ustaw, ustawynyň täze redaksiýasy, aksiýa, aksiýalar, ustaw maýasy, dokument, dokumentler, dokumentar, dokumentarsyz, dokumentasiýa, dokumental, sud, adres, filial, filiallar, ustaw kapitaly, territoriýa, tip, tipler, predmet, prosedura, kredit, forma, akt, aktlar, kategoriýa, kategoriýalar, organ, organlar, kreditor, kreditorlar, normatiw, punkt, punktlar, prosent, prosentler, summa, proporsiýa, walýuta, jebisleşdirmek, artykmaç hukukly, buhgalterlik, spisok, identifisirleme, buhgalteriýa, rekwizitler, komissiýa, komissiýalar, prawleniýe, inisiatiwa, kommersiýa, indiwidual, fondlar, aksionerler, tekst, sekretar, kandidat, protokol, protokollar, wariant, wariantlar, direksiýa, kapital, simwolika, emblema, ştamplar, blanklar, otçisleniýeler, real, seriýalar, professional, lisewoý sçetlar, operasiýalar, praktika, proses, zaýem, ştatlar, reglament, kwartal, fakt, kworum, zaçýot, žurnal, hronologik to change, respectively, by the words esaslyk maýasy, tertipnama, tertipnamalar, esaslyk maýasy, rejelenen görnüşdäki tertipnama, tertipnamasynyň rejelenen görnüşi, paýnama, paýnamalar, esaslyk maýasy, resminama, resminamalar, resminamalaşan, resminamalaşdyrylmadyk, resminamalar, resminamalaýyn, kazyýet, salgy, şahamça, şahamçalar, esaslyk maýasy, çäk, görnüş, görnüşler, närse, tertip, karz, görnüş, nama, namalar, dereje, derejeler, edara, edaralar, algydar, algydarlar, kadalaşdyryjy, bent, bentler, göterim, göterimler, möçber, deňeçer, pul, konsolidirleme, ýeňillikli, buhgalterçilik, sanaw, kybaplaşdyrma, buhgalterçilik, maglumatlar, topar, toparlar, müdiriýet, başlangyç, täjirçilik, hususy, gazna, paýdarlar, ýazgy, kätip, dalaşgär, teswirnama, teswirnamalar, görnüş, görnüşler, ýolbaşçylyk, maýa, nyşan, nyşanjyk, möhürçeler, resmi kagyzlar, geçirimler, hakyky, tapgyrlar, hünärmençilik, şahsy hasap, amallar, tejribe, iş, karz, wezipe birlikler, dessur, çärýek, delil, ses paýy, hasap, kitapçasy, döwürleýin.
2. In the text of the Law the words "converts", "converted", "conversion", "be converted", "conversion", "converted" to replace accordingly by words "conversions", "be converted", "conversion", "conversable", "convertable", "to converse".
3. In article 1 the word "(capital)", in the second part of article 7, the word "(capital)" in the sixth paragraph of the third part of article 9, the word "(capital)" in paragraph two of part three of article 12 the word "(capital)", in part one of article 13 the word "(capital)" are to be deleted.
4. In article 2, to change the words "About foreign investments in Turkmenistan" with the words "About foreign investments".
5. In the second part of article 3, the words "and its organs" should be deleted.
6. To delete the second sentence of the second part of article 4.
7. In part two, in the first paragraph of part three, in the first paragraph of part four of article 13, in the second paragraph of part one of article 66 of the translation of the Law into Russian, to replace the word "capital" with the word "of Fund".
8. In the last paragraph of the third part of article 16 in the text of the Law in the state language the words «ustaw we ätiýaçlyk gaznalarynyň» and in the last paragraph of part one of article 26 the words «ustaw we ätiýaçlyk gaznalaryndan» to change respectively by words «esaslyk maýasynyň we ätiýaçlyk gaznasynyň» and «esaslyk maýasyndan we ätiýaçlyk gaznasyndan».
9. The title of article 18 of the text of the Law in the state language to read as follows:
«18 madda. Paýdarlar jemgyýetiniň paýnamalarynyň derejeleri».
10. In the fifth paragraph of the third part of article 22 of the Law in the state language the words «görnüşleri, tipleri we kategoriýalary» to replace by words «şekilleri, görnüşleri we derejeleri».
11. In part four of article 23:
in the first paragraph, to delete the word "money" ;
to delete the word «taýdan» in the second paragraph of the text in the state language;
in the paragraph three of the text in the state language the words «material däl» to replace by words «maddy däl».
12. In the second paragraph of the second part of article 30, the words "legislation about the securities and stock exchanges in Turkmenistan" to replace by words "legislation of Turkmenistan in the field of securities market".
13. In the first part of article 58, the words "with the Law of Turkmenistan "About accounting" to replace by words "with the legislation of Turkmenistan in the field of accounting and financial reporting".
14. To delete the word "(maýasynyň)" in the second paragraph of the first part of article 66 in the text of the Law in the state language.
15. The name of the section X of the text of the Law in the state language to represent in the following wording:
«X BÖLÜM. JEMLEÝJI DÜZGÜNLER».
II. This Law shall enter into force from the date of its official publication.
The President Gurbanguly
of Turkmenistan Berdimuhamedov
Ashgabat city
February 28, 2015
№ 196-V.
THE LAW
OF TURKMENISTAN
About amendments and additions to the Law
of Turkmenistan «About the Joint Stock Companies»
(Bulletins of Mejlis of Turkmenistan, 2015, № 2, art. 66)
I. Amend the Law of Turkmenistan «About the Joint Stock Companies», adopted on November 23, 1999 (Bulletins of Mejlis of Turkmenistan, 1999, № 4, art. 55; 2009, № 2, art. 33; 2012, № 1, art. 48; 2015, № 1, art. 196), by the following changes and additions:
1. Article 2 to represent in the following wording:
«Article 2. Legislation of Turkmenistan about the joint stock companies
1. Legislation of Turkmenistan about the joint stock companies is based on the Constitution of Turkmenistan and consists of this Law and other normative legal acts of Turkmenistan.
2. If by the international agreement of Turkmenistan other rules are set, than those provided for by this Law, then the rules of the international agreement are to be applied.».
2. The second paragraph of the second part of the article 11 to represent in the following wording:
« - if the company’s establishment performed with violation of requirements of this Law and other normative legal acts of Turkmenistan;».
3. In the second part of article 19, in the first paragraph of part one of the article 20 the words «by other legislative» to replace by words «by other legal regulations».
4. In the first paragraph of the third part of article 23, in the first part of article 57, in the first paragraph of part one of the article 61 the words «by other legislative acts» to replace by words «by other normative legal acts».
5. The first part of article 16 to add the following paragraph:
«Dividends on shares are paid in accordance with the law of Turkmenistan in the fields of securities market.».
6. The first part of article 17 to represent in the following wording:
«1. The share is an equity investment security, securing the rights of its owner-shareholder to receive part of the profit of the issuing company as dividends, participation in the management of the company and part of the property, remaining after its liquidation.
Issue of shares by the company is carried out in accordance with the law of Turkmenistan in the fields of securities market.
Nominal value of all shares, issued by the company, shall be the same and defined in national currency of Turkmenistan.
The company is entitled to issue only registered shares, unless otherwise provided by the legislation of Turkmenistan».
7. The first part of article 18 to represent in the following wording:
«1. The company issues ordinary shares (with voting rights) or preferred shares (without voting rights) with guaranteed scope of rights. Preferred shares are issued in the volume, not exceeding 10 percent of size of registered statutory fund of the issuer.».
8. In article 20:
the third part to represent in the following wording:
«3. Dividends on preferred shares are paid in accordance with the law of Turkmenistan in the fields of securities market.»;
the fifth part to represent in the following wording:
«5. Satisfaction of requirements of the owner of preferred shares on shares in case of liquidation of the company is carried out in accordance with the law of Turkmenistan in the fields of securities market.».
9. The first paragraph of the second part of article 21 to represent in the following wording:
«2. Placement of the company’s shares is carried out in accordance with the law of Turkmenistan in the fields of securities market.».
10. In article 22:
in the second paragraph of the first part:
the words «from the register of shareholders» to replace by words «from the register of securities owners»;
in the text in the state language the words «adyna ýazylan» to replace by the word «atly»;
in the third part:
The first paragraph to represent in the following wording:
«3. Confirmation of the rights for undocumented security is carried out by the company or the Registrar, carrying out maintenance of the register of the owners of securities, by issuing an extract from the register of securities owners or the extract from the nominee account.»;
the last paragraph to represent in the following wording:
«- Registrar’s name, who maintains the register of the owners of securities.».
11. Article 30 to represent in the following wording:
«Article 30. The bonds of the joint stock company
1. The bond is the equity investment security, securing the right of its owner to receive from the issuer according to conditions of the issue the bonds and in the fixed term to receive its face value or other property equivalent.
The company by the decision of the general meeting of the shareholders is entitled to issue registered bonds for the purpose of attraction of funds for realization of investment programs and development of the company activities, unless otherwise specified by its articles of association. The general meeting of the shareholders approves the procedure and conditions issue of bonds to circulation. The bond does not provide to the owner the right to participate in the management of the issuer-company.
2. Nominal value of bonds is determined in national currency of Turkmenistan.
The bonds, issued to circulation, are subject to state registration in accordance with the procedure established by the legislation of Turkmenistan in the fields of securities market.
The company is entitled to issue the bonds:
- secured by a pledge of the company’s property;
- secured by third party guarantees;
- without guarantee for the amount, not exceeding the value of the company’s net assets.
3. Types, conditions of issue and nominal value of bonds for all issues of the issuer are provided in accordance with the law of Turkmenistan in the fields of securities market.
Realization of bonds can be performed by the company itself or by the investment institution.
Realization of the bonds owner rights of the distributable profit and part of the property, remaining after the liquidation of the company, is carried out in accordance with the law of Turkmenistan in the fields of securities market.
4. The company is entitled to provide for the possibility of early repayment of bonds at the request of its owners. At the same time in the decision to issue the bonds the repayment cost and term must be determined, no earlier of which they can be presented for repayment.
Repayment of bonds by the Issuer is carried out in accordance with the law of Turkmenistan in the fields of securities market.».
12. Article 32 to represent in the following wording:
«Article 32. The registry of the owners of securities
Within 30 business days from the date of state registration of the issue of registered securities the company must ensure that the registry is maintained of the owners of securities in accordance with the law of Turkmenistan in the fields of securities market.».
13. In the third and firth paragraphs of the second part of article 43 the word «points» to replace by the word «matters».
14. In the fifth paragraph of the first part of article 60 to delete the words «acts of legislation and».
15. In the second part of article 68 the words «by legislative acts» to replace by the word «by the legislation».
II. This Law shall enter into force from the date of its official publication.
The President Gurbanguly
of Turkmenistan Berdimuhamedov
Ashgabat city
May 23, 2015
№ 232-V.
THE LAW
OF TURKMENISTAN
About the Joint Stock Companies
(Bulletins of Mejlis of Turkmenistan 1999 г., № 4, art. 55)
(With changes and additions amended by the Laws of Turkmenistan
dated 18.04.2009 № 32-IV, 31.03.2012 № 297-IV, 28.02.2015 № 196-V
and 23.05.2015 № 232-V)
This law defines the legal basis for creation, operation, reorganization and liquidation of the joint stock company, powers and obligations of their participants (shareholders).
Section I. General Provisions
Article 1. The concept of the joint stock company
The joint stock company (hereinafter referred to as the company) is the enterprise, in which deposits of individuals and (or) legal entities are merged into the authorized Fund, divided by a certain number of shares, certifying the binding rights of the company’s participants (shareholders) in relation to the joint-stock company.
Article 2. Legislation of Turkmenistan about the joint stock companies
1. Legislation of Turkmenistan about the joint stock companies is based on the Constitution of Turkmenistan and consists of this Law and other normative legal acts of Turkmenistan.
2. If by the international agreement of Turkmenistan other rules are set, than those provided for by this Law, then the rules of the international agreement are to be applied.
Article 3. Principal provisions about the joint stock company
1. The company is the legal entity, has in ownership the separate property and is entitled on its behalf to acquire and to carry out property and personal non-property rights, bear responsibilities, be a plaintiff and defendant in court.
2. The company is responsible for its obligations all property belonging to it, which may be subject to foreclosure according to the current legislation of Turkmenistan. The state is not responsible for the company’s obligations, as well as the company is not responsible for the obligations of the state. The company does not bear responsibility for obligations of its shareholders, as well as and the shareholders are not liable for the company’s obligations and bear the risk of losses, related to its activities, only within the value of their shares.
3. The company established without limitation of the period of activity, unless otherwise specified by its founding document. The company recognized as founded from the moment of its state registration in accordance with the procedure established by law.
Article 4. Name and location of the joint stock company
1. The joint stock company has its own name in Turkmen and Russian languages, including an abbreviated name that indicates the type of the company.
The Joint stock company also is entitled to have the full and abbreviated name in a foreign language.
2. The Joint stock company, the name of which is registered in accordance with the procedure established by the legislation of Turkmenistan, has the exclusive right to its application.
3. The Joint stock company has a seal of the established sample and is entitled to have own logo, registered trademark in the established order, stamps and letterheads with its own name, which should not contain state symbols of Turkmenistan.
4. The place of the company – its legal address is the place where the company’s management bodies are located.
Article 5. Open and closed joint stock companies
1. The company may be open or closed type, which is reflected in its founding document.
2. The open company is entitled to conduct an open subscription to shares issued by it and to carry out their free sale in accordance with the requirements of this Law and other legal acts of Turkmenistan. Shareholders of an open company may alienate their shares without the consent of other shareholders of this company.
An open company is entitled to conduct a closed subscription to shares issued by it, if this is provided for by the Articles of Association of the Company.
3. The company, in which shares are distributed only among its founders or other pre-determined circle of persons, is the closed company. Such a company is not entitled to hold an open subscription to the shares issued.
Shareholders of a closed company have a pre-emptive right to purchase shares of the company or shares sold by other shareholders of this company.
4. The number of shareholders of open company is not limited. The number of shareholders of a closed company cannot exceed fifty. The company cannot have as the sole founder (shareholder) another company consisting of one person.
Article 6. Subsidiaries, branches and representative offices of the Joint Stock Company
1. The company is entitled to establish subsidiaries, branches and representative offices in the territory of Turkmenistan and foreign countries.
2. The subsidiary of the company has the powers of the legal entity and is independently responsible for its obligations. The subsidiary is not liable for the debts of the company that established it, and the company is not liable for the debts of the subsidiary.
3. The company's branch and representative office are not legal entities. The branch and representative office are endowed with the property of the company that established them and operate on the basis of their provisions approved by the company.
The affairs of the branch and representative office are managed by the head (manager) appointed by the company on the basis of a power of attorney issued by the company. The head (manager) who manages the affairs of the branch and representative office is responsible to the company according to the legislation of Turkmenistan.
Section II. Order of establishment of the Joint Stock Company
Article 7. The formation of the Joint Stock Company
1. Founders (participants) of the company may be both individuals and legal entities from Turkmenistan and foreign countries, as well as stateless persons. The number of founders (participants) of the company cannot be less than two.
2. The founders (participants) enter into a written agreement defining the procedure of their joint activity on foundation of companies, type of companies, the size of the statutory fund, the category and types of shares issued, the amount and procedure of their payment, powers and obligations of participants (shareholders) of the company. The company’s memorandum of association is not its founding document.
Article 8. The constituent meeting of the Joint Stock Company
1. The decision to create a company is made by the constituent meeting, which is authorized with the participation of all the founders or their authorized representatives.
2. The constituent meeting makes decisions:
- unanimously - on issues related to the establishment of the company, approval of the Memorandum and Articles of Association, monetary assessment of contributions made by the founders in kind;
- by a qualified majority of two-thirds of votes - on the issues of election of the company's executive and control bodies, as well as on the issues of establishing the Supervisory Board;
- by a simple majority of votes - on issues related to the election of the President of the constituent meeting and other issues.
3. The founders of the company are jointly and severally liable for the obligations related to its incorporation arising before the state registration of the company.
The company is liable for the obligations of the founders associated with its incorporation, in case of subsequent approval of their actions and expenses by the General Meeting of shareholders.
Article 9. Articles of Association of the Joint Stock Company
1. The company's founding document is its Articles of Association.
2. In addition to the information established by the legislation of Turkmenistan, the Articles of Association of the Company must contain the following information:
- full and abbreviated name of the company;
- legal address;
- type of company (open or closed);
- subject and purpose of the activity;
- founders;
- the size of the statutory fund and its payment terms;
- the order of subscription to shares;
- number, categories (simple, preferred) and types of issued shares and their ratio, nominal value of shares;
- number of shares;
- fulfillment of obligations to issue shares and buy them back;
- procedure for distribution of profit;
- method of formation, quantitative composition, competence and term of office of members of the executive (managing) and control bodies of the company;
- powers of shareholders the owners of various categories and types of shares;
- method of convocation of the General Meeting of the shareholders, its legal capacity and procedure in case of incapacity, conditions and method of exercising the right to vote;
- information about the company's subsidiaries, branches and representative offices.
3. If necessary, the Articles of Association of the Company may specify the following provisions:
- conditions for making non-monetary deposits and other advantages provided for the company's founders;
- powers related to the issue of different categories and types of shares, their number and par value;
- about the rules related to the release of bonds;
- on the possibility and procedure for withdrawing the company's shares from circulation;
- on the terms and powers granted to the executive (managing) body of the company when increasing the statutory fund.
Articles of Association of the Joint Stock Company may set limits on the number of shares owned by one shareholder and provide for the company's pre-emptive right to purchase shares sold by its shareholders, if other shareholders of this company have not used their pre-emptive right to purchase them.
4. The Articles of Association of the Company is signed by the founders.
5. Each change or addition to the Articles of Association of the Company can only be made on the basis of a decision of the General Meeting of the shareholders. The decision to amend or Supplement the Articles of Association of the Company is made by a majority vote of shareholders who collectively hold at least two-thirds of the statutory fund. Changes and additions to the Articles of Association must be registered with the state registration body of the company.
Article 10. The powers and obligations of shareholders
1. All shareholders have the powers and obligations arising from this Law and the Articles of Association of the Company.
2. Shareholders are entitled to:
- participate in the management of the company's affairs as defined by the Articles of Association of the Company;
- receive part of the profit (dividends) from the company's activities;
- perform transactions with the company's shares owned by them in accordance with the procedure provided for by this Law and the Articles of Association of the Company;
- transfer the powers (or part of the powers) granted by the share to its representative (representatives);
- receive information about the company's activities, including getting acquainted with accounting and reporting data and other documentation in accordance with the procedure provided for by the Articles of Association of the Company;
- receive in a case of liquidation of the company the part of the property left after settlements with creditors or its value in the manner prescribed by the legislation of Turkmenistan and the statutes of the company;
- appeal decisions made by the company in court.
Shareholders may also have other powers provided for by this Law, other regulatory legal acts of Turkmenistan and the Articles of Association of the Company, including the pre-emptive right to receive products (services) produced by the company, as well as to purchase shares of the company of a new issue.
3. Shareholders are required:
- to pay for shares in the manner, amount and methods provided for by the company's constituent documents;
- not to disclose confidential information about the company's activities and refrain from any activities that may cause damage to the company.
No other duties may be assigned to the shareholders without their consent.
The provisions of the Articles of Association and decisions of the company's management and control bodies that impose certain obligations on shareholders are invalid.
4. The shareholder are not entitled to own any separate property that is part of the company's property, including the property that was contributed by the shareholder.
5. The shareholder is not entitled to demand that the company redemption the shares it has purchased, except in the cases provided for in item 6 of this article.
6. Shareholders-owners of voting shares are entitled to require the company to purchase all or part of their shares in cases when the General Meeting of shareholders makes the following decisions:
- on the reorganization of the company;
- on the completion of the major transaction, the subject of which is property, the value of which is more than 50 percent of the value of the company's net assets at the date of the decision to make such a transaction;
- amendments and additions to the present Articles of Association or approval of the Articles of Association in a new version that restricts their powers.
The right of such a claim arises for shareholders if they voted against the adoption of these decisions or did not participate in the voting. The company is obligated to inform shareholders about the availability of this right, the price and the procedure for redemption.
Article 11. Registration of the Joint Stock Company
1. State registration of companies, including those incorporated with the participation of foreign capital or as a result of privatization of state-owned enterprises, is carried out in accordance with the procedure established by the legislation of Turkmenistan. Data on companies contained in the state register of legal entities must be regularly published by the registration authorities in the official mass-media.
2. The state body that registers the company is entitled to refuse to register the company in the following cases:
- if the company's establishment performed with violation of requirements of this Law and other normative legal acts of Turkmenistan;
- if the constituent document or the statement of incorporation of the company contains incorrect, incomplete or inaccurate information.
Section III. The property of the Joint Stock Company
Article 12. Authorized capital of the company
1. The contributions of the founders (shareholders) paid for the acquired shares constitute authorized capital of the Joint Stock Company which defines the minimum amount of property guaranteeing interests of its creditors.
The minimum amount of the statutory fund of the Joint Stock Company must be the total nominal value of shares issued and placed by the company, equal to at least 200 times the minimum wage established by the legislation at the time of making contributions by the founders (shareholders) to the Authorized Fund and submitting documents for state registration of the company.
2. The total nominal value of all shares that the company is entitled to issue according to its Articles of Association is the declared authorized capital of the company.
At the time of establishment, the company may issue and place shares for the entire amount of the declared statutory fund or only for a part of it. In this case, the total nominal value of the placed shares must not be lower than the minimum size of the statutory fund established by this Law.
3. Open subscription to shares is not allowed when establishing a company. All shares must be placed among the founders and paid for within 12 months from the date of state registration of the company.
At the time of state registration of the company, its authorized capital must be paid by the founders for at least half.
4. The number of shares issued by the company of each type, terms and conditions of their issue within the statutory fund are determined by the Articles of Association of the Company.
Article 13. Increase or decrease in the size of the statutory fund of the Joint Stock Company
1. The Joint Stock Company is entitled to increase or decrease the size of the declared statutory fund.
2. An increase in the size of the company's statutory fund is allowed only after the acquisition of all previously announced shares by a decision of the General Meeting of the shareholders. An increase in the size of the company's statutory fund to cover losses incurred by the company is not allowed.
The company is entitled to increase the size of the declared statutory fund by increasing the nominal value of shares, issuing new shares. Changes to the size of the statutory fund must be made to the Articles of Association of the Company and registered. The issue of new shares before the registration of changes in the Articles of Association of the Company is prohibited.
3. The company is entitled to reduce the size of the statutory fund by reducing the par value of shares or reducing their total number, by purchasing a portion of shares in order to cancel them. The acquisition and redemption of a part of shares is allowed if it is stipulated by the Articles of Association of the Company.
The company is not entitled to reduce the size of the statutory fund if as a result it is less than the minimum size of the statutory fund defined by this Law.
4. The decision to reduce the company's statutory fund within thirty days from the date of its adoption must be registered in accordance with the procedure established by this law. After registering the fact of reduction of the company's statutory fund, the company's management body is obliged to publish a notice about it in one of the official periodicals twice at intervals of at least 30 days.
Reducing the size of the statutory fund is allowed only with the written consent of the company's creditors.
5. If at the end of the second and each subsequent financial year the value of net assets is less than the statutory fund, the company is obliged to declare and register when due hereunder reduction of the size of its statutory fund or to declare the liquidation of the company.
The decision to increase or decrease the size of the company's statutory fund is made at the General Meeting by at least two-thirds of the total number of shareholders' votes.
Shareholders and bodies authorized by the state are entitled to demand the liquidation of the company in court, if the decision to reduce the size of the statutory fund or liquidation of the company in accordance with this article by the company has not been made.
Article 14. The net assets of the Joint Stock Company
The company's net assets are the amount of the company's assets less its liabilities per share. The value of the company's net assets is estimated according to the company's accounting data in accordance with the procedure established by the body responsible for state regulation of the accounting system.
Article 15. The income and funds of the Joint Stock Company.
1. The balance sheet and net income of the Joint Stock Company is determined in accordance with the procedure established by the legislation of Turkmenistan.
2. The company's net income is placed at its full disposal and distributed by the decision of the General Meeting of the shareholders only after the company's annual report, balance sheet and financial performance report are adopted or approved.
3. The company is entitled to use its net income to form consumption funds and a reserve fund. The procedure for forming and using funds is determined by the Articles of Association of the Company.
4. The company's reserve fund must be at least 15 percent of the statutory fund. The amount of annual contributions to the reserve fund is established by the Articles of Association of the Company.
The company's reserve Fund is intended to cover losses, repay the company's bonds, pay interest on bonds and dividends on preferred shares, as well as to redeem the company's shares in the absence of other funds. The reserve fund may not be used for other purposes.
5. The company according to its Articles of Association and decision of shareholders may provide for the formation of a special fund for the company's employees from the net income. Its funds are spent exclusively on the purchase of shares of the company sold by the shareholders of this company, for their subsequent placement among the company's employees.
Article 16. Dividend of the Joint Stock Company
1. The dividend is a portion of the net income of the Joint Stock Company distributed to shareholders in proportion to the number of shares.
Payment of dividends may be made in cash, and, as an exception, in the form of goods or other assets, if this is provided for by the Articles of Association of the Company.
Dividends on shares are paid in accordance with the law of Turkmenistan in the fields of securities market.
2. The form of payment of dividends and their amount per share are provided by the General Meeting of shareholders, unless otherwise provided by the Articles of Association of the Company. The company declares the amount of dividends excluding taxes on them.
3. The company is not entitled to declare and pay dividends:
- up to full payment of all declared status fund;
- before the purchase of all shares to be purchased by the company;
- if at the time of payment of dividends there is a real threat of insolvency (bankruptcy) of the company, or such a threat will appear to the company as a result of payment of dividends;
- if the value of the company's net assets is less than the size of its authorized and reserve funds.
4. The fixed dividend on preferred shares and interest on the bonds are provided by the company when they are issued.
Shares purchased no later than 30 days before the officially announced date of payment are entitled to dividend. No dividend is paid on shares that were not placed or were purchased by the company.
Payment of dividends is carried out according to the Articles of Association of the Company. No interest is accrued on unpaid or not received dividends.
Dividends on shares are taxed in accordance with the law of Turkmenistan.
Section IV. The company's securities and their placement procedure
Article 17. General Provisions about shares of the Joint Stock Company
1. The share is an equity investment security, securing the powers of its owner-shareholder to receive part of the profit of the issuing company as dividends, participation in the management of the company and part of the property, remaining after its liquidation.
Issue of shares by the company is carried out in accordance with the law of Turkmenistan in the fields of securities market.
The nominal value of all shares issued by the company should be the same and defined in the national currency of Turkmenistan.
The company is entitled to issue only registered shares, unless otherwise provided by the legislation of Turkmenistan.
2. The share is indivisible. In cases where the same share belongs to several persons, all of them are recognized as one shareholder in relation to the company and can carry out their powers through one of them or through a common representative. In cases stipulated by the legislation, the company may issue fractional shares.
Article 18. Categories of shares of the Joint Stock Company
1. The company issues ordinary shares (with voting powers) or preferred shares (without voting powers) with guaranteed scope of powers. Preferred shares are issued in the volume, not exceeding 10 percent of the size of the registered statutory fund of the issuer.
2. Articles of Association of the company or the decision of the General Meeting of the shareholders may provide for the issue of preferred shares of various categories. When deciding on the issue of preferred shares of various categories, the terms of their placement and the procedure for circulation on the secondary market of securities are determined.
3. Shareholders - holders of preferred shares are entitled to participate in the General Meeting of shareholders when resolving the following issues:
- reorganization and liquidation of the company;
- amendments and additions to the Articles of Association of the Company restricting the powers of shareholders - the owners of this category of preferred shares;
- granting to shareholders - the owners of another category of preferred shares advantages in the order of payment of dividends and (or) the liquidation value of shares.
Article 19. Common shares of the Joint Stock Company
1. The ordinary share gives to the shareholder the right to participate in the General Meeting of shareholders with voting powers in resolving all issues put to the vote.
2. The ordinary share grants to the shareholder the right to receive dividends in the amount determined by the General Meeting of the company after payment of dividends on preferred shares, the right to receive part of the company's property in the event of its liquidation in accordance with the procedure established by this Law and by other regulatory legal acts of Turkmenistan.
Article 20. Preferred shares of the Joint Stock Company
1. The preferred share of the company grants the shareholder the pre-emptive right over the owner of ordinary shares to receive dividends in a predetermined amount, as well as a part of the property in the event of liquidation of the company in accordance with the procedure established by this Law and by other regulatory legal acts of Turkmenistan.
Preferred shares of the same type grant to their owner the same scope of powers and have the same nominal value.
The Articles of Association of the Company may provide additional privileges for these shares.
2. The Joint Stock Company is entitled to carry out the issue of the following types of preferred shares:
- with guaranteed amount of dividends;
- with a different amount of powers of the shareholder.
The Articles of Association of the Company may also specify the possibility and conditions for converting preferred shares into common shares.
3. Dividends on preferred shares are paid in accordance with the law of Turkmenistan in the fields of securities market.
4. In cases where the amount of dividends paid to shareholders on common shares exceeds the amount of payments due to on preferred shares, the holders of these shares must be paid up to the amount of the dividend paid on common shares.
The Articles of Association of the Company may establish that an unpaid or not fully paid dividend on preferred shares is accumulated and paid subsequently (cumulative preferred shares). Alienation of preferred shares with an unpaid dividend is carried out with the right to receive it by the new owner of the share.
5. Satisfaction of requirements of the owner of preferred shares on shares in case of liquidation of the company is carried out in accordance with the law of Turkmenistan in the fields of securities market.
Article 21. Methods to place shares in the Joint Stock Company
1. The placement of shares means their selling.
Shares are placed in the following ways:
- among the founders of the Joint Stock Company and other persons according to this Law;
- the private method – among qualified investors;
- open method - among an unlimited number of persons by free sale in accordance with the law about securities.
2. Placement of the company's shares is carried out in accordance with the law of Turkmenistan in the fields of securities market.
The primary issue of the company's shares is carried out only among its founders. The subsequent issue of shares is not allowed until the full placement of the previous issue of shares of the company.
Issues of securities of the company are subject to state registration in accordance with the procedure established by the legislation of Turkmenistan on securities.
Article 22. Form of issue of shares of the Joint Stock Company.
1. The Joint Stock Company issues shares in documentary or non-documentary form. The form of issue of shares is determined by the decision of the General Meeting of the shareholders.
Shareholders may be issued a certificate for the total aggregate nominal value of the shares. For a registered share, such a certificate or certified extract from the register of securities owners serves as the basis for exercising the powers of the shareholder.
2. The share in documentary form must contain the following details:
- the name of the Joint Stock Company, its location;
- name of the security - "share", its serial number, date of issue, type of share (common or preferred), its nominal value, name of the holder;
- the amount of the company's declared statutory fund on the date of issue of shares, as well as the number of issued shares;
- term of payment of dividends;
- signature of a person authorized by the company and the chief accountant of the company.
3. Confirmation of the powers for undocumented security is carried out by the company or the Registrar, carrying out maintenance of the register of the owners of securities, by issuing an extract from the register of securities owners or the extract from the nominee account.
This statement may be issued for the total amount of securities and must contain the following information:
- the name of the Joint Stock Company, its location;
- numbers of securities;
- types, kinds and categories of securities;
- amount of issue of securities, total amount of securities and date of issue registration;
- number of securities purchased;
- name of the owner;
- revenue on preferred shares;
- seal and signature of a person authorized by the company;
- Registrar’s name, who maintains the register of the owners of securities.
Article 23. Terms and payment procedure for shares of the Joint Stock Company
1. Shares can only be issued to the owner after full payment of their cost.
The form of payment for shares at its establishment is determined by the agreement about incorporation of the company or the Articles of Association of the Company. In case of additional issues of shares, the terms of their placement and payment are determined by the General Meeting of shareholders in the issue prospectus. The subscription period for shares must not exceed 6 months.
2. Among the founders, the company's shares are placed at their nominal value.
The company's Shares allocated between the founders must be fully paid in accordance with paragraph 3 of article 13 of this Law.
The shareholder who does not pay for his shares within the established time period may be deemed to have retired from the number of shareholders by a decision of the General Meeting of the company, and a corresponding notification is sent to him. In case of incomplete payment of the deposit by the founder, the unpaid part by the decision of the General Meeting may be transferred to another founder for payment.
3. The sale of shares is carried out in accordance with the procedure established by this Law, the Articles of Association of the Company and by other regulatory legal acts of Turkmenistan.
Shares allocated by the company cannot be sold at a price lower than the market price or par value, whichever is greater. This provision does not apply:
1) to shares sold by an intermediary at a price that may be lower than their market value, but not more than the amount of the intermediary's remuneration;
2) to shares allocated under options;
3) to shares subject to conversion.
4. Payment for shares may be carried out in the national currency of Turkmenistan, foreign currency at the exchange rate set by the Central Bank of Turkmenistan on the date of payment, property rights, including by setting off creditors' claims to the company, land use powers and powers to results of operations, as well as other property.
Intellectual property rights must be documented in accordance with the law of Turkmenistan.
Payment for shares in securities is allowed only at the exchange price of the latter, determined on the organized market of securities. It is not allowed to pay for shares in the form of personal non-property rights and other intangible benefits.
5. A non-monetary contribution made to pay for shares is estimated in monetary terms, taking into account the current market value. The management body of the company is obliged to indicate the grounds for determining the value of a real estate deposit in the decision on valuation. The Articles of Association of the Company may set restrictions on the types of property accepted as payment for shares.
In cases where the right to use property is transferred as payment for shares, the amount of this payment is determined by the use fee calculated for the entire period of use by the company of this property.
Without the consent of the General Meeting, early withdrawal of property, the right to use which serves as payment for the company's shares, is not allowed. Unless otherwise provided by the agreement, the risk of accidental loss or damage to the property transferred for use to the company is borne by the owner of the property.
6. The share does not grant voting powers until it is fully paid for, with the exception of shares purchased by the founders when the company is incorporated.
Unpaid shares held by the company do not grant voting powers and no dividends are paid on them. These shares do not participate in the counting of votes and are not taken into account when determining the quorum at the General Meeting of shareholders.
Such shares must be sold within six months of their receipt by the company otherwise the General Meeting of the shareholders must decide to reduce the company's statutory fund by redeeming the specified shares.
Article 24. Options to buy shares of the Joint Stock Company
The Joint Stock Company is entitled to issue options to purchase its shares, which give the company's shareholders and employees a pre-emptive right to purchase a certain number of issued shares of the company. The price of shares included in an option must not be lower than their market or par value (whichever is greater) at the date of issue of such an option.
Article 25. Acquisition of the Joint Stock Company's outstanding shares
1. The Joint Stock Company is entitled to acquire the Shares allocated by it, if provided by its articles of association.
The purchase of outstanding shares by the company is subject to the following conditions:
- decision by the shareholders' meeting to reduce the statutory fund;
- withdrawal of one or more shareholders from the company;
- reorganization of the company;
- conversion of preferred shares to common shares;
- availability of other grounds stipulated by the Articles of Association.
2. By the decision of the shareholders' meeting to reduce the size of the statutory fund, the company may acquire a part of the company's shares allocated by it in order to reduce their total number. Shares purchased by the company in this way are redeemed.
3. When shareholders leave the company, the shares purchased by the company do not grant voting powers, they are not counted in the vote count, and no dividends are accrued on them. Such shares must be sold no later than six months from the date of their acquisition, otherwise the General Meeting of the shareholders must decide to reduce the company's statutory fund by redeeming these shares or to increase the par value of the remaining shares by redeeming the purchased shares while maintaining the size of the statutory fund provided for in the Articles of Association of the Company.
4. The company is not entitled to make a decision to purchase outstanding shares by the company if the nominal value of outstanding shares is 90 percent of its statutory fund.
The decision to purchase shares must determine the number of shares of each type purchased by the company, the purchase price, the form and term of payment, as well as the period during which the purchase of shares is carried out.
Payment for shares when they are purchased is made in cash, unless otherwise provided by the Articles of Association of the Company. The period during which the purchase of shares is carried out must not be less than 30 days.
5. Each shareholder-owner of shares is entitled to sell them, and the company is obliged to purchase them, if the decision is made to purchase shares by the company. If the total number of shares declared to be acquired by the company exceeds the number of shares that may be acquired by the company subject to the restrictions set forth in this article, the shares are purchased from the shareholders in proportion to the declared requirements.
The company must inform shareholders of the decision to purchase shares no later than 30 days before the start of implementation of the decision. The purchase of preferred shares is carried out at the price stipulated by the Articles of Association of the Company or at the market value of shares, reflecting the balance between aggregate supply and demand in a certain time interval as a result of the quotation of securities on the secondary market.
Article 26. Restrictions on the acquisition of the Joint Stock Company's outstanding shares
1. The Joint Stock Company is not entitled to acquire its common and preferred shares:
- until full payment of the entire declared fund of the company;
- if at the time of their acquisition by the company there is a real threat of insolvency (bankruptcy) of the company, or such a threat will appear as a result of the acquisition of shares;
- if at the time of their acquisition, the value of the company's net assets is less than the authorized and reserve funds.
2. The company is not entitled to acquire outstanding shares prior to the redemption of all shares which redemption requirements are provided for by this Law.
Article 27. General rules for repurchasing shares of the Joint Stock Company at the request of shareholders
1. Shareholders who own common shares are entitled to demand that the Joint Stock Company redemption all or part of their shares in the following cases:
- the decision of the General Meeting of shareholders to reorganize the company or make the major transaction, if they voted against such a decision or did not participate in voting on these issues;
- making amendments and additions to the Articles of Association of the Company or approving the Articles of Association of the Company in a new version that restrict the powers of shareholders, if they voted against the relevant decision or did not participate in the voting.
2. Share redemption by the company is carried out at the market value of these shares.
Article 28. Procedure for the exercise by shareholders the right to redemption by the Joint Stock Company of their shares
1. The company is obligated to inform shareholders of their right to demand redemption by the company of their shares, the price and procedure for redemption.
The notice of the General Meeting of the shareholders, the agenda of which may give rise to the shareholders' right to demand the redemption of shares by the company, must contain information about the price and procedure for repurchasing shares.
2. A written request from a shareholder to redeem his/her shares is sent to the company indicating the place of residence (location) of the shareholder and the number of shares that he/she requires to be redeemed.
The deadline for submitting such a request to shareholders is no later than 45 days from the date of making the relevant decision by the General Meeting and notifying shareholders about it.
After the deadline for submitting the claim expires, the company is obliged to redeem the shares from the shareholders who have submitted the claim for redemption within 30 days.
3. The total amount of funds allocated by the company for share redemption should not exceed 10 percent of the company's net asset value at the date of the decision to redemption.
If the total number of shares that may be redeemed is less than the number of shares that have been claimed for redemption, the shares are redeemed from the shareholders in proportion to the declared requirements. Shares redeemed by the company in the event of its reorganization are redeemed when they are purchased. Shares purchased by the company in other cases provided for by this Law are placed at the disposal of the company. These shares according to paragraph 3 of article 26 of this Law do not give the company voting powers and no dividends are accrued on them, they must be sold no later than six months after their redemption, otherwise the General Meeting of the shareholders must decide to reduce the company's statutory fund by redeeming these shares.
Article 29. General rules for deviding and consolidating shares of the Joint Stock Company
1. By the decision of the General Meeting of the shareholders, the company is entitled to devide or consolidate the company's shares.
Shares are devided by increasing the total number of issued shares, while simultaneously reducing the nominal value of the company's shares proportionally.
Shares are consolidated by reducing the total number of issued shares and simultaneously increasing the nominal value of the company's shares proportionally.
Deviding or consolidation of the company's shares should not lead to a change in the size of the company's statutory fund.
2. When consolidating and (or) deviding shares, the Articles of Association of the Company shall be amended accordingly with respect to the nominal value and number of newly placed shares of the company.
3. In case of consolidation and (or) deviding of shares by the company, a redemption of previously issued shares may be provided within the limits established by this Law, at their value not lower than the book value or accounting value.
If a fractional part of shares is formed during their deviding or consolidation, the company is entitled, with the consent of the shareholder, to redeem this fractional part of shares in accordance with the procedure established by this Law.
Deviding and consolidation of shares should not lead to restrictions on the powers of shareholders in matters of voting, receiving dividends and part of property in the event of liquidation of the company.
Article 30. The bonds of the Joint Stock Company
1. The bond is equity investment security, securing the right of its owner to receive from the issue of the bonds and in the fixed term to receive its face value or other property equivalent.
The company by the decision of the General Meeting of the shareholders is entitled to issue registered bonds for the purpose of attracting funds for implementation of investment programs and development of the company activities, unless otherwise specified by its articles of association. The General Meeting of the shareholders approves the procedure and conditions of the issue of bonds to circulation. Bond does not provide to the owner the right to participate in the management of the issuer-company.
2. The Nominal value of bonds is determined in the national currency of Turkmenistan.
The bonds, issued to circulation, are subject to state registration in accordance with the procedure established by the legislation of Turkmenistan in the fields of securities market.
The company is entitled to issue the bonds:
- secured by a pledge of the company's property;
- secured by third party guarantees;
- without guarantee for the amount not exceeding the value of the company's net assets.
3. Types, conditions of issue and nominal value of bonds for all issues of the issuer are provided in accordance with the law of Turkmenistan in the fields of securities market.
Realization of bonds may be performed by the company itself directly or by the investment institution.
Realization of the bonds owner powers to the distributable profit and part of the property, remaining after the liquidation of the company, is carried out in accordance with the law of Turkmenistan in the fields of securities market.
4. The company is entitled to provide for the possibility of early repayment of bonds at the request of its owners. At the same time in the decision to issue the bonds the repayment cost and term must be determined, no earlier of which they may be presented for repayment.
Repayment of bonds by the Issuer is carried out in accordance with the law of Turkmenistan in the fields of securities market.
Article 31. Convertible securities of the Joint Stock Company
1. The conversion of the company's securities is an exchange of securities of one category or type for another.
The conversion of the company's securities may be performed if:
- change in the face value of securities issued by the company;
- consolidation and deviding of securities;
- reorganization of company;
- replacement of preferred shares with common shares at the next issue of the company's securities;
- changing the type of securities (of bonds to shares);
- in other cases provided for by this Law and other regulatory legal acts of Turkmenistan.
2. The issue of convertible securities must be stipulated by the Articles of Association of the Company or by the decision of the General Meeting of the shareholders. Otherwise, the conversion of securities is illegal.
The terms and procedure for conversion are provided by the decision of the General Meeting of the shareholders on the placement of convertible securities and must not contradict the legislation of Turkmenistan.
3. The order of exchange of bonds for shares is determined by the terms of issue of bonds to circulation. The right to conversion is exercised for a period of no more than 5 years from the date of issue of bonds, unless otherwise provided by the terms of issue of bonds to circulation.
The price of converted of securities must not be lower than the market or par value of the shares (whichever is greater) at the time of issue of bonds.
4. Preferred shares may be converted to ordinary shares. The conversion price of preferred shares must not be lower than the par value of common shares at the date of the decision to convert them. The right to conversion and the conditions for conversion are determined by the Articles of Association of the Company.
Terms of issue of bonds or prospectus of shares in the case of issue of convertible securities, must contain information about the proportion of exchange of securities of one type or category to another.
Article 32. The registry of the owners of securities
Within 30 business days from the date of state registration of the issue of registered securities the company must ensure that the registry is maintained of the owners of securities in accordance with the law of Turkmenistan in the fields of securities market.
Article 33. Illegal actions in transactions with securities of the Joint Stock Company
1. It is illegal for an individual or legal entity to engage in fraudulent actions against another individual or legal entity by using false information or failing to provide the required information in securities transactions.
2. Any actions or practices intentionally used by an individual or legal entity to mislead another individual or legal entity in the purchase or sale of any of the securities are illegal if the person who suffered losses as a result of such deceptive actions did not know or should not have known about it.
A person who has suffered losses as a result of such actions is entitled to take legal action. In this case, the person who has suffered losses is entitled to compensation for damages according to the law.
Section V. Procedure for transactions related to the acquisition or disposal of property of the Joint Stock Company
Article 34. Major transactions related to the acquisition or disposal of property of the Joint Stock Company
1. Transactions made by the company's management bodies in the course of ordinary business activities are regulated by the Articles of Association of the Company.
2. The main conditions and procedure for making major transactions of the company related to the acquisition or alienation of significant property of the company are determined by this Law, the Articles of Association of the Company and by other legislative acts of Turkmenistan.
3. A major transaction is recognized when:
- transaction and (or) several associated transactions related to the acquisition or alienation or possible alienation of the Joint Stock Company directly or indirectly of the company's property, the total value of which is 25 or more percent of the company's assets;
- transaction or several associated transactions related to the purchase or sale, including the issue and placement, of shares (bonds) of the company that make up 25 percent or more of the shares (bonds) issued by the company.
4. Articles of Association of the company or the decision of the General Meeting of the shareholders may refer to major transactions other than those listed in paragraph 3 of this article, as well as certain categories of transactions that are carried out in accordance with the procedure provided for major transactions.
Article 35. Procedure for making the decision by the Joint Stock Company
1. The major transaction may be concluded by the Joint Stock Company only after a preliminary decision is made by the company's management body. All creditors of the company must be notified of any major transaction by the company at least 10 days prior to its completion.
2. The decision to make the major transaction is made by the General Meeting of shareholders by a three-quarter majority of the votes of the shareholders participating in the meeting, unless the Articles of Association of the Company provides for a different procedure for making a decision by the General Meeting of shareholders to conclude the major transaction.
3. The decision to make by the company the major transaction, the subject of which is the purchase and placement of securities, is made by the General Meeting of shareholders in the manner prescribed by the Articles of Association.
4. The shareholder who does not participate in the voting or who voted against the decision to make the major transaction is entitled to demand that the company redemption its shares in accordance with the procedure established by this Law.
Article 36. Basic rules for determining the value of the company's property to be acquired or disposed
1. The value of the alienated property of the Joint Stock Company, which is the subject of the major transaction, must not be lower than the market prices existing for similar property in the place and on the day of the conclusion of the major transaction.
2. The value of the property purchased by the Joint Stock Company that is the subject of the major transaction must not be higher than the market prices that exist for similar property at the place and on the day of the conclusion of the major transaction.
3. The determination of the value of acquired or alienated property that is the subject of the major transaction is carried out by an auditor or an independent appraiser, except in cases where, according to this Law, the market value of the property is determined by the court.
Article 37. Consequences of non-compliance with the requirements for concluding by the company the transaction on acquisition or alienation of the company's property
1. Failure to comply with the requirements provided for by this Law and the Articles of Association of the Company when making the major transaction entails the invalidity of this transaction, except in cases when the person who concluded the transaction with the Joint Stock Company acted in good faith and did not know or should not have known about the failure of the company to comply with these requirements.
2. The claim for invalidation of the major transaction may be filed by any interested parties.
Article 38. Conclusion of transaction by the Joint Stock Company in which the interests of individual shareholders are recognized
1. Persons interested in making the Joint Stock Company transaction are recognized as:
- members of the company's management bodies;
- persons holding positions in the company's management bodies;
- the shareholder who jointly owns 10% or more of the voting shares with a dependent (affiliated) person, as well as their spouses, parents, children, brothers, sisters and their affiliates.
2. The existence of an interest in the transaction of the persons specified in part 1 of this article is recognized if these persons:
- are th party to such a transaction or participate in it as the representative of the party or intermediary;
- own 10 or more percent of the voting shares (stocks, units) of a legal entity that is a party to the transaction or participates in it as the representative or intermediary;
- hold positions in the management bodies of a legal entity that is a party to the transaction or participates in it as the representative or intermediary.
Article 39. Rules for providing information to the company about the interest in the transaction of the Joint Stock Company
The persons specified in paragraph 1 of article 39 of this Law are required to inform the management bodies of the Joint Stock Company, the company's audit commission (auditor) and the company's auditor of the information:
1) about legal entities in which they own independently or jointly with their affiliated person 10 or more percent of voting shares (stocks, units);
2) about legal entities in whose management bodies they hold positions;
3) about transactions known to them to be made or assumed, in which they may be recognized as interested parties.
Article 40. Requirements for the procedure for concluding an interested party transaction
1. The decision to conclude an interested party transaction with the Joint Stock Company is made in accordance with the Articles of Association of the Company by the company's management body by a majority vote of the members of this body who are not interested in making it.
2. The decision to enter into an interested party transaction with the Joint Stock Company is made by the General Meeting of shareholders by a majority vote of shareholders not interested in the transaction in the following cases:
a) if the amount of payment under the transaction and the value of the property that is the subject of the transaction exceeds 5 percent of the company's assets;
b) if the transaction and (or) several associated transactions are an offering of voting shares of the company and other securities convertible into voting shares in an amount exceeding 5 percent of the voting shares previously issued by the company.
3. The conclusion of an interested party transaction does not require the decision of the General Meeting of the shareholders provided for in paragraph 2 of this article, if:
a) the transaction is a loan provided by an interested person to the joint-stock company;
b) transaction is made in the course of ordinary business activities between the company and another party that took place before the moment when the interested person is recognized as such according to paragraph 1 of article 39 of this Law.
4. If it is impossible to determine on the date of the General Meeting the shareholders transactions made in the continuation of economic relations between the company and the other party to the transaction, in which there may be an interest in the future, the requirements of paragraph 2 of this article are considered fulfilled, provided that the General Meeting of shareholders decides to establish a contractual relationship between the company and another person, specifying the nature of transactions that may be made, and their maximum amounts.
5. If all members of the management body authorized by the Articles of Association of the Company to make transactions are recognized as interested parties, the transaction may be made by the decision of the General Meeting of the shareholders, adopted by the majority vote of shareholders not interested in the transaction.
6. If the interested party transaction is simultaneously the major transaction related to the acquisition or transfer of property by the company, the provisions of articles 36, 37, 39, 40 of this Law shall apply to the procedure for its execution.
Article 41. Consequences of non-compliance with the requirements for an interested party transaction
1. An interested party transaction that is made in violation of the transaction requirements provided for by this Law and the Civil code of Turkmenistan shall be deemed invalid.
2. The person interested in making the Joint Stock Company transaction made in violation of the requirements provided for by this Law shall be liable to the company in the amount of losses incurred by them to the company. If several persons are responsible, their liability to the company is joint and several.
3. Disputes about the invalidity of interested party transactions that were made in violation of the requirements of this Law are resolved by the court.
Section VI. The management bodies of the Joint Stock Company
Article 42. The management bodies of the Joint Stock Company
The management of the company's affairs is carried out by:
- The General Meeting of the shareholders, which is the highest management body of the company's affairs;
- Supervisory Board of the company;
- company board;
- the company's audit commission.
Article 43. The General Meeting of the shareholders
1. The highest management body of the Joint Stock Company is the General Meeting of the shareholders. The company holds an annual General Meeting of the shareholders and extraordinary General Meetings of shareholders.
2. The General Meeting of the shareholders may be held in full-time, part-time and mixed forms:
the face-to-face form provides for making a decision of the General Meeting of the shareholders by personal participation of the shareholders and (or) their authorized representatives;
the absentee form provides for shareholders to make decisions on issues on the agenda by means of the written survey and absentee voting;
the mixed form provides shareholders (their authorized representatives) with the opportunity to make decisions on issues on the agenda by personally attending the General Meeting or by participating in absentee voting.
The form and procedure of the General Meeting of the shareholders is determined by the Supervisory Board of the company in accordance with the Articles of Association of the Company.
3. The annual General Meeting of the shareholders is held only in person. The company is obliged to hold an annual General Meeting of the shareholders within the terms stipulated by the Articles of Association, but no later than 3 months after the end of the company's financial year.
At the annual General Meeting of shareholders, the company's Supervisory Board, the audit commission (auditor) are elected, the audit organization (auditor) is approved, the annual report submitted by the Supervisory Board and other issues related to the competence of the General Meeting of the shareholders are considered.
4. Extraordinary meetings are called by the Supervisory Board in accordance with the procedure provided for by the Articles of Association of the Joint Stock Company, on its own initiative, at the request of the company's management Board, the audit commission (auditor), as well as by shareholders who collectively have at least 10 percent of the votes. The right to participate in the General Meeting of shareholders is held by shareholders registered in the company's registry no later than 60 days before the date of the General Meeting.
Article 44. Competence of the General Meeting of the shareholders
The exclusive competence of the General Meeting of the shareholders includes:
- amendments and additions to the Articles of Association of the Joint Stock Company or approval of the Articles of Association of the Company in a new version;
- reorganization of company;
- liquidation of the company, as well as appointment of a liquidation commission, approval of interim and final liquidation balance sheets;
- determination of the quantitative composition and term of office of the Supervisory Board of the company, election of its members and early termination of their powers;
- appointment of the company's management Board, determination of its functions, term of office and conditions for their early termination, if the Articles of Association of the Company does not refer to the competence of the Supervisory Board of the company;
- transfer of powers of the company's executive body to the commercial organization (management organization) or individual entrepreneur (manager), conclusion of the contract with them;
- election of members of the company's audit commission, determination of their term of office, conditions and procedure for their early termination;
- approval of the company's auditor;
- approval of annual balance sheets, reports on the company's financial results and the procedure for profit distribution;
- approval of the procedure for conducting the General Meeting of the company's shareholders;
- defining the form of information and the procedure for submitting materials to shareholders, as well as to the mass-media to inform shareholders;
- determining the size of the share issue;
- increase or decrease in the size of the company's statutory fund;
- making decisions on deviding and consolidation of shares;
- decision to make the major transaction;
- decision on the amount of remuneration and (or) compensation for expenses related to the performance of functions by members of the Supervisory Board, Executive body, audit commission, auditor;
- acquisition and redemption by the company of outstanding shares;
- participation in other organizations and associations;
- approval of organizational and administrative documents stipulated by the Articles of Association of the Company;
- transfer of powers related to the competence of the General Meeting of the shareholders to the Supervisory Board of the company;
- resolution of other issues stipulated by this Law.
Matters falling within the exclusive competence of the General Meeting of the shareholders may not be transferred to the Supervisory Board or Executive body of the company.
Article 45. The order of convening the General Meeting of the shareholders
1. Preparation for the General Meeting of the shareholders is carried out by the Board of the company, which determines:
- the date, place and time of holding of the General Meeting of the shareholders;
- agenda;
- form of the General Meeting;
- the date when the list of shareholders who are entitled to participate in the General Meeting of shareholders was compiled;
- procedure for notifying shareholders of the meeting;
- list of information (materials) provided to shareholders;
- the form and text of the voting ballot.
2. Proposals to the agenda of the General Meeting of the shareholders are made by the Board, the Executive body, the audit commission (auditor), as well as by shareholders who collectively hold at least 10 percent of the shares (common and preferred), but no later than 45 days before the date of the General Meeting.
Information about the holding of the General Meeting of the shareholders must be communicated to the shareholders by sending them a written notice (if the number of shareholders of the company is not more than 50 people) or published in the media no later than 30 days before the date of the meeting.
3. The notice of the General Meeting of the shareholders must contain information about the date, time and place of the meeting; the issues included in its agenda and the procedure for familiarizing shareholders with the materials on the agenda of the General Meeting of the shareholders. The Articles of Association of the Company may also provide for other forms of notification to shareholders.
Article 46. Holding of the General Meeting of the shareholders
1. The right to vote at the General Meeting of shareholders on issues put to the vote shall be held by shareholders-owners of common shares of the Joint Stock Company and shareholders-owners of preferred shares – on issues specified in paragraph 2 of article 19 of this Law.
At each General Meeting of shareholders, the list of shareholders present and their voting shares is maintained.
2. Voting at the General Meeting of shareholders and counting of votes is carried out on the principle: "one ordinary share – one vote". The decision of the General Meeting of the shareholders on the issue put to the vote shall be taken by a simple majority of the shareholders participating in the meeting, unless a higher ratio of the shareholders' votes is established for making a decision by this Law or the Articles of Association of the Company. Voting may be conducted in open or closed forms. The voting form is determined by the Articles of Association of the Company or the General Meeting of shareholders.
3. The procedure for conducting the General Meeting and making decisions is determined by the Articles of Association of the Company, the decision of the Board of the company and approved by the General Meeting of shareholders.
4. The General Meeting is eligible if it is attended by shareholders who collectively hold at least two-thirds of the voting shares. In the absence of a quorum, the Chairman of the meeting announces the date of the new General Meeting of the shareholders.
The agenda of the new meeting remains the same and cannot be changed. The new General Meeting of the shareholders is eligible if it is attended by shareholders who collectively hold at least half of the voting shares. Notification of the new General Meeting of the shareholders is made in the form provided for in article 46 of this Law, no later than 10 days before the date of its holding.
5. The General Meeting elects the Chairman and Secretary of the meeting, and for voting and summing up its results – the Counting Commission. The Counting Commission may not include members of the Board, members of the auditing commission (auditor), Board members, Director General (Director), the managing organization or the Manager, as well as persons nominated for these positions.
Article 47. Procedure for voting and decision-making by the General Meeting of shareholders
1. The Counting Commission determines whether there is a quorum for holding the General Meeting, explains how shareholders (their representatives) exercise their voting powers at the meeting, the procedure for voting on issues on the meeting's agenda, ensures the conditions and procedure for voting, counts votes and summarizes voting results, draws up thye Minutes on voting results, and transmits voting ballots to the company's archive.
2. Voting at the General Meeting is carried out using ballots. The form and text of voting ballots are approved by the Board of the company.
The voting ballot must contain:
- the full name of the Joint Stock Company;
- the date and time of holding of the General Meeting of the shareholders;
- the wording of each question put to the vote;
- voting options for each issue ("for", "against", "abstained");
- signature of the shareholder.
In case of voting on the issue of electing the member of the Board of the company or the audit commission (auditor), the voting ballot must contain information about the candidate with the indication of the surname, first name, patronymic.
3. When counting votes, votes are counted on those issues on which the shareholder left only one of the possible answers to the question contained in the ballot. Voting ballots filled in in violation of the above requirement are considered invalid and are not taken into account when summarizing the voting results. If the voting ballot contains several issues put to the vote, failure to comply with the above requirement in respect of one or more issues does not entail the recognition of the ballot as invalid as a whole.
Based on the results of voting, the Counting Commission shall draw up a Minutes on the results of voting, signed by the members of the Counting Commission. After drawing up the Minutes on the results of voting and signing the Minutes of the General Meeting, the voting ballots are sealed by the Counting Commission and deposited in the archive.
4. The Minutes on voting results is attached to the minutes of the General Meeting. The results of voting are announced and approved by the General Meeting of shareholders.
The minutes of the General Meeting shall be drawn up in two copies and signed by the Chairman and Secretary of the meeting.
The minutes of the General Meeting of the shareholders indicate: place and time of holding of the General Meeting of the shareholders;
- the total number of votes held by the shareholders-owners of the company's voting shares;
- the number of votes held by the shareholders participating in the meeting;
- agenda of the meeting.
The minutes of the General Meeting of the shareholders of the company must contain the principal provisions of speeches, questions put to the vote, the results of voting on them, and decisions taken by the meeting.
The results of voting, as well as decisions adopted by the General Meeting of shareholders, are brought to the attention of shareholders in accordance with the procedure and terms stipulated by the Articles of Association of the Company, but no later than 30 days from the date of making these decisions.
Article 48. The Supervisory Board of the Joint Stock Company
1. The Supervisory Board (hereinafter referred to as the Board of the company) is elected from among the shareholders or their representatives. Payment for the work of the shareholder's representative on the Board is made by the shareholder himself.
2. The company Board monitors the activities of the management Board, authorizes the conclusion of particularly responsible business contracts, and performs other functions provided for by the Articles of Association of the Company.
Members of the Board are not entitled to act on behalf of the company.
Article 49. Competence of the company Board
1. The exclusive competence of the company Board is to make decisions on the following issues:
- identification of the company's priority areas of activity;
- convocation of annual and extraordinary General Meetings of shareholders of the company;
- development of proposals for the agenda of the General Meeting of the shareholders;
- determination of the date, place and time of the General Meeting of the shareholders;
- drawing up the list of shareholders who are entitled to participate in the General Meeting of shareholders, and consideration of other issues related to the preparation and conduct of the General Meeting of the shareholders and referred to the competence of the Board in accordance with the provisions of this Law;
- increasing the company's statutory fund by increasing the nominal value of shares or by placing an additional issue of shares by the company, if such a right is granted to the the Board by the Articles of Association of the Company or by the decision of the General Meeting of the shareholders;
- placement by the company of bonds and other of securities, unless otherwise provided by the Articles of Association of the Company;
- determination of the market value of property in accordance with the requirements of this Law;
- acquisition of Shares allocated by the company, of bonds and other of securities in cases provided for by this Law;
- use of the company's reserve and other funds in the manner determined by the Articles of Association of the Company or the decision of the General Meeting of the shareholders;
- approval of organizational and administrative documents of the company, referred by the Articles of Association of the company to the competence of the Board;
- incorporation of branches and opening of representative offices of the company;
- making decisions on the company's participation in non-commercial organizations.
2. The competence of the company's Board is to develop and submit proposals to the General Meeting of shareholders on the following issues:
- reorganization of company;
- non-application of the pre-emptive right of a shareholder to purchase shares of the company or of securities convertible into shares;
- forms of information and submission of materials (information) to shareholders, including the determination of the mass-media body where reports on the company's activities will be published;
- deviding and consolidation of shares;
- conclusion of transactions, making decisions related to the competence of the General Meeting of the shareholders of the company;
- acquisition and redemption by the company of outstanding shares;
- participation in holding companies, financial and industrial groups, and other associations of commercial organizations;
- creating an invoice Commission;
- the amount of remuneration and compensation paid to members of the audit commission (auditor) of the company related to the performance of their functions, and the amount of payment for the services of the auditor;
- the amount of the annual dividend on shares and the procedure for its payment;
- the possibility of combining the functions of the Director General, members of the company's management Board with positions in the management bodies of other organizations;
- conclusion of an agreement on the transfer of powers of the company's executive body to the managing organization or manager, unless otherwise provided by the Articles of Association of the Company.
3. Issues referred to the exclusive competence of the Board of the company may not be transferred to the Executive body of the company for decision.
The Board of the company may make proposals for inclusion in the agenda of the General Meeting of the shareholders, and represent the interests of the company in court.
Article 50. Election of the company's Board
1. Members of the company's Board are elected by the annual General Meeting of shareholders. The number of the company's Board and the term of office of its members are provided by the Articles of Association of the Company.
Members of the Board of the company may be elected repeatedly. By the decision of the General Meeting of the shareholders, the powers of any member (all members) of the company's Board may be terminated prematurely.
2. Members of the Board of the company may not be members of the Executive body (management Board) of the company or the audit commission.
Article 51. Chairman of the Board of the company
1. The Chairman of the the Board of the company is elected by the members of the Board by a simple majority of votes.
The Board of the company is entitled to re-elect its Chairman.
The Chairman of the Board may not be a member or head of the Executive body of the company.
2. The Chairman of the Board of the company organizes the work of the Board, convenes meetings and presides over them, ensures that the minutes of the meeting are kept, and is entitled to preside over the General Meeting of shareholders.
In the absence of the Chairman, by the decision of the Board, its functions are performed by one of the members of the Board of the company.
Article 52. Meeting of the Board of the company
1. The Board meeting is convoked at the initiative of its Chairman, at the request of members of the Board of the company, auditing Commission (auditor) or the auditor, the Executive body of the company, as well as other persons specified by the Articles of Association companies.
2. The procedure for convening and holding meetings of the Board of the company is determined by the Articles of Association of the Company or organizational and administrative documents of the company.
Article 53. The Executive body (bodies) of the Joint Stock Company
1. Management of the company's current activities is performed by its Executive collegial (management Board) or sole (Chairman of the management Board, Director General) body.
The Articles of Association of the Company may assign management of its current activities to the management Board (Directorate) and the Director General (Chairman of the management Board) simultaneously.
2. If the Articles of Association of the Company assigns management of its current activities simultaneously to the collective and individual executive bodies, the Articles of Association of the company must define the competence of each of these bodies. At the same time, the person performing the functions of the sole Executive body also performs the functions of the Chairman of the collective Executive body of the company and is a member of it.
3. By the decision of the General Meeting of the shareholders, the powers of the Executive body may be transferred under the contract to the commercial organization (management organization) or to an individual entrepreneur (Manager). The terms of the contract are approved by the Board of the company, unless otherwise provided by the Articles of Association of the Company.
4. The competence of the Executive body of the company is to resolve all issues of the company's current activities, except for those that fall within the competence of the General Meeting of the shareholders or the Board of the company. The General Meeting of the shareholders is entitled to pass the responsibility of Executive body of the Executive Board and of the General Meeting of the shareholders of the company.
5. The powers and obligations of the sole executive body of the company, members of the collective executive body, management organization or Manager are determined by this Law, the Articles of Association of the Company and the agreement concluded by each of them with the company.
Formation of the company's Executive bodies and early termination of their powers are carried out by the decision of the General Meeting of the shareholders, if the Articles of Association of the Company does not refer this to the competence of the company's Board.
The Director General represents the interests of the company, makes transactions on behalf of the company, approves the staff, issues orders and gives instructions that are mandatory for all employees of the company.
Combining the functions of the Director General, members of the management Board of the company with positions in the management bodies of other organizations is allowed only with the consent of the Board of the company.
Article 54. The Board of the Joint Stock Company
1. Collective Executive body of the Joint Stock Company - the management Board acts in accordance with this law, the Articles of Association of the Company and internal document of the company (regulations, rules or other document) approved by the General Meeting of shareholders of the company.
The management Board is accountable to the General Meeting of shareholders of the company, the Board of the company and organizes the implementation of their decisions.
Members of the management board may be employees of the Joint Stock Company (shareholders and persons who do not have shares), as well as persons who are not in an employment relationship with the company.
The Chairman of the Board (Director General) convenes and leads Board meeting, maintains minutes of the meeting, signs the minutes of the Board meetings and all documents on behalf of the company.
2. The management Board must submit reports to the Board of the company on the following issues:
1) at least once a year - about the planned policy and other fundamental issues of future business management;
2) when discussing the annual balance sheet by the Board - about the profitability of the Joint Stock Company, in particular, the return on equity;
3) at least once a quarter - on the progress of Affairs, in particular on the turnover and position of the Joint Stock Company;
4) before entering into agreements on transactions that may be important for the profitability of the Joint Stock Company.
In addition, it is the responsibility of the management Board to inform the Chairman of the Board of the company on other important issues of the company's activities.
3. The Board of the company may at any time require the management Board to submit a report on the Affairs of the Joint Stock Company, its legal and business relations with related enterprises, as well as on the progress of Affairs at these enterprises that may have a significant impact on the position of the Joint Stock Company.
4. The procedure and amount of remuneration to members of the management Board for their work are determined by the company's Board. Labor relations established between the company and members of the management Board must not contradict the labor legislation of Turkmenistan.
Members of the management Board are responsible to the company for the results of their activities. They must not distribute information constituting industrial and commercial secrets and, in case of violation or dishonest performance of their duties, compensate the joint-stock company for damages incurred in this regard.
5. The General Meeting of the shareholders or the Board of the company, if the Articles of Association of the company refers this to its competence, may cancel the appointment of a member of the Board or the Chairman of the Board in cases of gross violation of their duties, inability to properly conduct business or loss of confidence of the General Meeting of the shareholders or the Board of the company.
Article 55. Audit Commission (auditor)
1. The audit commission (auditor) monitors the financial and economic activities of the Joint Stock Company.
The number of members of the audit commission, the procedure for electing its members and the Chairman of the audit commission by the General Meeting of shareholders are determined by the Articles of Association of the Company. Members of the audit commission (auditor) may not be members of the company's Board or management Board.
2. The procedure and functions of the audit commission are determined by the company's organizational and administrative documents approved by the General Meeting of shareholders.
3. Audits of financial and economic activities are carried out by the audit commission (auditor) on behalf of the General Meeting of the shareholders, the Board of the company, on its own initiative or at the request of the shareholders (shareholder) who collectively own at least 10 percent of the shares.
At the request of the audit commission (auditor), the company's officials are required to submit all necessary materials on the company's financial and economic activities and personal explanations.
4. The audit commission (auditor) is required to call an extraordinary General Meeting of the shareholders if the interests of the company are violated.
The competence of the audit commission (auditor) on matters not provided for by this Law is determined by the Articles of Association of the Company.
Article 56. The auditor of the Joint Stock Company
The General Meeting of the company's shareholders annually approves the company's auditor, with whom the company enters into an agreement. The amount of payment for its services is determined by the Board of the company.
The auditor (individual or audit organization) provides an independent validation of performances of accounting and financial reporting for the company, their compliance with the legislation of Turkmenistan, shall submit a report on the reliability, completeness and accuracy of presentation by the company's assets, liabilities, equity and financial results in the reporting year, the Board and the General Meeting of shareholders.
Article 57. Officers of the Joint Stock Company
The officers of the Joint Stock Company are members of the management Board and members of the audit commission. The procedure for appointing and dismissing officials, as well as citizens, who cannot be appointed as officials, is determined by this Law, by other normative legal acts of Turkmenistan and the Articles of Association of the Company.
The company's officials perform their functions in the interests of the company. If an official of the company has a financial interest in the transaction concluded by the company, it is obliged to:
- inform the management Board and the Board of the company in writing;
- obtain written permission to make a transaction from the management Board and the Board of the company, respectively.
3. There is a financial interest of an official of the company:
a) when the specified official is the owner, creditor or is in employment relationship with the legal entity or individual who are the main suppliers of goods and services to the company or the main buyers of goods or recipients of services, respectively, produced or provided by the company;
b) when an official is the owner, creditor or has an employment relationship with an individual or legal entity that is fully or partially formed from the company's property or is entitled to receive income from the disposal of the company's property;
c) in other cases stipulated by the Articles of Association of the Company.
Officials of the company must not use or allow the use of the company's property and property rights for other purposes other than those defined by the Articles of Association of the Company, its General Meeting or the company Board.
4. The company's officials shall refrain from establishing or participating in any form in activities that compete with the company during their term of office, except in cases when such competition was expressly authorized in writing (minutes of the General Meeting of the shareholders, minutes of the Board meeting and other documents) by a majority of interested Board members or non-interested shareholders representing more than half of the company's statutory fund.
5. In case of forced liquidation of the company the company's officials are liable to creditors for the company's obligations:
- if they did not perform their duties properly;
- if they are guilty of gross negligence in fulfilling their obligations;
- if comprehensive measures were not taken to prevent the forced liquidation of the company.
An official of the company is not liable if he proves that he took reasonable measures to prevent the forced liquidation of the Company, even if the measures taken by him did not achieve the result.
6. If the company's annual report, balance sheet and financial results report or interim financial statements misrepresent the company's actual financial position, the company's officials who have drawn up and (or) certified the listed documents bear subsidiary liability to third parties who have suffered material damage as a result.
Section VII. Accounting and reporting of the Joint Stock Company
Article 58. Accounting and financial statements of the Joint Stock Company
1. The Joint Stock Company is required to maintain accounting records and submit financial statements in accordance with the law of Turkmenistan in the field of accounting and financial reporting, this Law and by other regulatory legal acts of Turkmenistan.
2. The Executive body of the company is responsible for the organization, state and reliability of accounting in the company, timely submission of the annual report and other financial statements to the relevant authorities, as well as information about the company's activities submitted to shareholders, creditors and the media, in accordance with this Law, by other normative legal acts of Turkmenistan and the Articles of Association of the Company.
3. The company's annual report is subject to preliminary approval by the company Board no later than 30 days before the date of the annual of the General Meeting of the shareholders.
Article 59. Storage of documents of the Joint Stock Company
1. The Joint Stock Company is required to keep the following documents:
- duly registered decision on the establishment of the company, the Articles of Association of the Company, amendments and additions made to the Articles of Association, certificate of state registration of the company;
- documents confirming the company's powers to property on its balance sheet;
- internal documents of the company approved by the General Meeting of shareholders and other management bodies of the company;
- regulations on the company's branch or representative office;
- annual financial report;
- prospectus of the company's shares issue;
- accounting documents;
- established by the legislation of Turkmenistan financial reporting documents submitted to the relevant state bodies;
- minutess of General Meetings of shareholders of companies meetings of Board, audit Committee (auditor) and collegial Executive body (management Board);
- lists of the company's affiliates indicating the number and type of shares they hold;
- conclusions of the company's audit commission (auditor), auditor, and state financial control bodies;
- other documents provided for by this Law, the Articles of Association, internal organizational and administrative documents of the company, decisions of the General Meeting of the shareholders, the Board of the company, the management Board, as well as documents provided for by regulatory legal acts of Turkmenistan.
2. The company stores the above documents at the location of its Executive body.
Article 60. Mandatory publication of the Joint Stock Company information about its activities
1. The Joint Stock Company is obliged to publish the following data in the mass media accessible to all shareholders of this company:
- annual report of the company;
- balance sheet;
- report on financial results;
- prospectus for the issue of shares of the company in cases provided for by this Law, by other normative legal acts of Turkmenistan;
- notice about holding of the General Meeting of the shareholders;
- lists of the company's affiliates indicating the number and type of shares they hold;
- other information determined by the regulatory legal acts of Turkmenistan.
2. In the case of the public offering of bonds, the Joint Stock Company is required to publish information about it in accordance with the procedure established by the regulatory legal acts of Turkmenistan.
Section VIII. Reorganization of the Joint Stock Company
Article 61. Reorganization of the Joint Stock Company
1. The reorganization of the Joint Stock Company (merger, accession, division, separation and transformation) is carried out in accordance with this Law and by other regulatory legal acts of Turkmenistan.
The company is considered to be reorganized from the moment of state registration of newly formed legal entities and their receipt of certificate issued by the holder of the Unified State Register.
2. All types of reorganisation (except for transformation of the legal form of the company, not carrying out and not conducting a public offering of securities) may be made not earlier than within two months after publication in the official mass-media notice. Creditors are entitled within 3 months from the date of their notification of the upcoming reorganization of the company to submit a claim to the company for early termination or performance of the relevant obligations and compensation for losses to them.
3. If the dividing balance sheet does not make it possible to determine the legal successor of the reorganized company, then the newly formed legal entities are jointly and severally liable for the obligations of the reorganized company to its creditors.
When reorganizing the company, it is not allowed to exchange its shares for other property or property rights, except for shares of the company incorporated as a result of the reorganization.
Article 62. The merger (accession) of the Joint Stock Company
1. Merging (joining) of the Joint Stock Company is carried out by combining their assets and consolidating their balance sheets, followed by replacing the shares of the companies involved in the merger (joining) with the shares of the newly incorporated – at the merger or continuing to exist – at the merger.
When a company is reorganized by joining another company, the first of them is considered to be reorganized from the moment of making a record in the Unified State Register about the termination of the activity of the affiliated company.
2. The company, incorporated as a result of the merger, is the legal successor of all powers and obligations of the companies that performed the merger.
The merger is carried out on the basis of the merger agreement concluded between the companies that merged. The merger agreement is the contract for the incorporation of the company that is established as a result of a merger, and it must meet all the requirements for the company agreement stipulated in this Law. In addition, the merger agreement must also contain the procedure for exchanging shares of the company involved in the merger for shares of the company being incorporated.
3. The draft merger agreement approved by the Boards of all companies involved in the merger is submitted to the General Meetings of shareholders and must be adopted by each of them separately by a majority of at least two-thirds of the total number of votes of the company's shareholders. The transfer balance of assets is also approved at the General Meetings of shareholders of companies involved in the merger.
4. Approval of the Articles of Association and election of the Board of the newly formed company are held at the Joint General Meeting of shareholders of the companies participating in the merger. The voting procedure at the joint General Meeting of shareholders is determined by the merger agreement.
5. Each shareholder of the company involved in a merger who did not vote for the merger and did not consent to it in any other form provided for in the Articles of Association of this company is entitled to require the company incorporated as a result of the merger to purchase its shares at the price at which the Joint Stock Company acquires its own shares or early repays the bonds.
Shareholders do not have this right if, at the time of entering into the merger agreement, their shares were listed on the organized market of securities.
Claims arising from this right may be submitted before the expiration of a three-month period from the date of registration of the company incorporated as a result of the merger. If the company refuses to meet such requirements, the persons who have this right may appeal the refusal in court.
6. Joining one or more companies to another company is carried out in the manner prescribed by this article for merging companies.
Joining may be carried out by increasing the statutory fund of the company that continues to exist after joining. In this case, an additional number of shares may be issued in exchange for shares owned by the shareholders of the companies being merged. The terms and conditions for exchanging additional issued shares for shares owned by the shareholders of the companies to be merged are determined by the General Meetings of shareholders of all companies simultaneously with the decisions on reorganization. These decisions are made by the majority of at least two-thirds of the total number of votes of the shareholders of each company.
This procedure is only allowed if the shares of all participating companies are listed on the organized market of securities.
7. Termination of the activities of companies involved in a merger is made on the basis of the merger agreement (the founding agreement on the formation of a new company).
Notice of reorganization of the company continues to exist after the merger, and the termination of activity of merging companies with the application of the Merger agreement or of the registered prospectus (in case of additional issue of shares) within seven days from the date of signing of the contract or the registration of a prospectus is subject to registration in the Unified State Register in the manner prescribed by the legislation of Turkmenistan.
Article 63. The division of the Joint Stock Company
1. Division of the Joint Stock Company is carried out by creating two or more independent companies based on one of the joint stock companies with the division of balance sheets and property. The activity of the reorganized company shall be terminated.
The Board of the company being reorganized in the form of a division shall submit for consideration of the General Meeting of the shareholders the issue of reorganizing the company, the procedure and conditions for this reorganization, the foundation of companies and the procedure for converting shares of the company being reorganized into shares and securities of the companies being incorporated.
The General Meeting of the shareholders of the company being reorganized in the form of the division decides on the reorganization, incorporation of new companies and the procedure for converting shares of the company being reorganized into shares of the companies being incorporated.
2. The powers granted to the shareholder of reorganized company as a result of the exchange of shares owned by him for shares of newly incorporated companies may not be reduced or restricted in comparison with the powers granted to him by the Articles of Association of the reorganized company.
3. The General Meeting of the shareholders of each newly incorporated company decides on approval of its Articles of Association and election of the company's Board.
When the company is divided, all its powers and obligations are transferred to two or more newly incorporated companies according to the dividing balance sheet. Termination of the activity of the reorganized company and incorporation of new companies is subject to registration in the Unified State Register in accordance with the procedure established by the legislation of Turkmenistan.
Article 64. The allocation of the Joint Stock Company
1. Reorganization of the company by means of separation is carried out through the incorporation of one or more new companies with the transfer of part of the powers and obligations of the reorganized company without termination of their activities.
2. The Board of the company, reorganized in the form of separation, brings to the consideration of the General Meeting of the shareholders the issue of reorganization of the company, order and conditions of allocation, the incorporation of new companies (societies), the possibility of conversion of shares of the reorganized company into the shares of companies formed and procedure of such conversion, on approval of separation balance sheet.
3. When the company is separated from one or more companies, a part of the powers and obligations of the company reorganized in the form of separation passes to each of them, according to the dividing balance.
Article 65. Transformation of the Joint Stock Company
1. The Joint Stock Company may be transformed into another organizational and legal form by the decision of the General Meeting of its shareholders after fulfilling all the obligations of the company. The activity of the Joint Stock Company is terminated.
2. When converting the company's legal form, the size of the shares of the company's statutory fund owned by each of its shareholders cannot be changed.
3. Participants of the new enterprise being incorporated take a decision at their joint meeting on approval of its constituent documents and election (appointment) of management bodies in accordance with the requirements of the legislation of Turkmenistan.
When the company is reorganized, all powers and obligations of the reorganized company are transferred to the newly incorporated company according to the transfer act. Termination of the company's activity and incorporation of a new enterprise is subject to registration in the Unified State Register.
Article 66. Takeover of the Joint Stock Company
1. Takeover of the Joint Stock Company is carried out by buying out more than 50 percent of its shares by another Joint Stock Company buyer.
A merged company may maintain its independent status provided that the size of its statutory fund meets the requirements of this Law.
If 100 percent of the shares owned by the company being absorbed are purchased, the latter loses its independence and its balance sheet is consolidated with the balance of the buyer company.
2. The company Board shall submit for consideration of the General Meeting of the shareholders of each of the company (the buyer of the shares and the seller of the shares) issues of reorganization of the company in the form of acquisitions, approval of the contract of purchase and sale of shares, approval of transfer act, the right of conversion shares to the seller in shares of buyer stock. The General Meeting of the shareholders of each of the two companies decides on the number and terms of purchase and sale of shares, amendments and additions to the Articles of Association of the Company.
If a decision is made to buy or sell 100 percent of the shares, the seller company (the company being absorbed) ceases its activities.
3. The company-seller of shares notifies its creditors in writing no later than 30 days from the date of the decision to reorganize in the form of a takeover. The creditor is entitled to demand from the company termination or early performance of obligations and compensation for losses by written notification of the company no later than 30 days from the date of receipt of the notification of the company's reorganization.
The company, which has sold its 100 percent shares, is recognized as absorbed and ceased operations from the moment of making the corresponding entry in the Unified State Register.
Section IX. Liquidation of the Joint Stock Company
Article 67. Liquidation of the Joint Stock Company
1. The Joint Stock Company may be liquidated:
- due to the expiration of the company's term of operation established in the Articles of Association;
- by the decision of the General Meeting of the shareholders;
- by the decision of the judicial authorities in cases stipulated by the legislation of Turkmenistan.
2. In the event of voluntary liquidation of the company, the General Meeting of shareholders shall appoint the liquidation commission, to which the authority to manage of the company is transferred.
If the company is liquidated by the decision of the judicial authorities, including if the company is declared bankrupt, the liquidation commission (liquidators) may be appointed by the court.
If one of the shareholders of the company being liquidated is the state, its representative is included in the liquidation commission.
3. The liquidation commission (judicial bodies or persons appointed by them) shall publish the notice in the official mass-media on the forthcoming liquidation of the company and on the terms for creditors to file claims. Creditors known to the public must be notified in person.
If the decision to liquidate the company is made by its founders before the issue of its shares, the company's liquidation may be carried out without public notice. In this case, the founders actually back their contributions, minus costs incurred in connection with the establishment of the company recoverable in the manner established by the General Meeting of founders.
4. Notification of the company's liquidation is sent to the registering body within one week from the moment of approval by the General Meeting of shareholders (in case of voluntary liquidation) or by the court of the report of the liquidation commission and the liquidation balance sheet.
The company is considered liquidated from the moment of making the corresponding entry in the Unified State Register.
Article 68. Procedure for liquidation of the Joint Stock Company
1. The liquidation commission acts on behalf of the company and exercises the powers provided by its Articles of Association for the Board and Executive body of the company.
The liquidation Commission evaluates the assets of the Joint Stock Company, identifies its liabilities and calculates them, draws up the liquidation balance sheet and submits it for approval to the General Meeting of shareholders.
The liquidation Commission is entitled to make new transactions only insofar as it is necessary for the completion of the company's current affairs and settlement with creditors.
If the funds available to the liquidated company are not sufficient to satisfy the creditors' claims, the liquidation commission shall sell other property at public auction in accordance with the procedure established for the execution of court decisions.
2. The liquidation commission publishes in the mass-media the notice on the liquidation of the Joint Stock Company, the procedure and terms for filing claims by its creditors. The deadline for creditors to submit claims must not be less than 2 months from the date of publication of the notice of liquidation.
Payments to creditors of the liquidated company of monetary amounts are made by the liquidation commission in the order of priority established by the legislation of Turkmenistan.
3. The funds remaining in the company after payment of wages and social insurance, fulfillment of obligations to the budget and other creditors are distributed among the shareholders at the liquidation value in accordance with the procedure established by this Law and the Articles of Association of the Company. The liquidation value is the value of the realizable property of the liquidated enterprise in actual prices paid per share.
If these funds are sufficient to reimburse all shareholders for the par value of their securities, they are distributed among the shareholders in proportion to the par value of their shares.
Otherwise, the pre-emptive right is granted to:
- the owner of bonds;
- the owner of preferred shares;
- the owner of ordinary shares.
The property distribution is carried out after the full calculation with the previous sequence. If the company's property is not sufficient to pay accrued but unpaid preferred shares, dividends and the liquidation value determined by the Articles of Association of the Company, the property is distributed among them in proportion to the number of shares they own.
4. The liquidation of the company is considered completed, and the company is considered to have ceased its activities from the moment of its exclusion from the Unified State Register.
The liquidation Commission bears property responsibility for the damage caused by it to the company, its participants, as well as to third parties, in accordance with the law of Turkmenistan.
Section X. Final provisions
Article 69. Transitional provision
1. Joint-stock companies established before the entry into force of this Law are obliged to make appropriate changes to their Articles of Association within one year from the date of entry into force of this Law.
2. All changes and additions made to the company's founding document, the adoption by the company of a new Articles of Association in accordance with this Law, are subject to entry into the Unified State Register.
President Saparmurat
of Turkmenistan Turkmenbashi
Ashgabat
November 23, 1999
# 400-I