Unofficial translation of new Armenian Civil Code.
Do not rely on for specific cases unless you have appropriate
local law advice
LAW OF THE REPUBLIC OF ARMENIA
Adopted by the National Assembly
of the Republic of Armenia
June 17, 1998
ON PUTTING THE CIVIL CODE OF THE REPUBLIC OF ARMENIA INTO EFFECT
Article 1. To put the Civil Code of the Republic of Armenia
(hereinafter – the Code) into effect as of January 1, 1999.
Article 2. To repeal as of January 1, 1999:
1) the Civil Code of the Armenian SSR adopted by the Statute
of the Armenian SSR of June 4, 1964, "On Adoption of the Civil
Code of the Armenian SSR" ("Gazette of the Supreme Soviet of the
Armenian SSR," 1964, No. 17, item 84) with further amendments and
additions;
2) the Edict of the Presidium of the Supreme Soviet of the
Armenian SSR of November 24, 1964, "On the Procedure for Putting
the Civil and Civil Procedure Codes of the Armenian SSR into
Effect" (Gazette of the Supreme Soviet of the Armenian SSR, 1964,
No. 34, item 182);
3) the Statute of the Republic of Armenia of October 31,
1990, "On Ownership in the Republic of Armenia" (Gazette of the
Supreme Soviet of the Republic of Armenia, 1990, No. 20, item
383), and also the Resolution of the Supreme Soviet of the
Republic of Armenia of October 31, 1990, "On Putting the Statute
of the Republic of Armenia 'On Ownership in the Republic of
Armenia' into Effect" (Gazette of the Supreme Soviet of the
Republic of Armenia, 1990, No. 20, item 384);
4) the Statute of the Republic of Armenia of March 14, 1992,
"On Enterprises and Entrepreneurial Activity" (Gazette of the
Supreme Soviet of the Republic of Armenia, 1995, No. 5, item 80)
and also the Resolution of the Supreme Soviet of the Republic of
Armenia of February 26, 1992, "On Putting the Statute of the
Republic of Armenia 'On Enterprises and Entrepreneurial Activity'
into Effect" (Gazette of the Supreme Soviet of the Republic of
Armenia, 1992, No. 4, item 73) with further amendments and
additions;
5) the Statute of the Republic of Armenia of December 30,
1993, "On Enterprises Acting by Guaranty" ("Gazette of the Supreme
Soviet of the Republic of Armenia, 1993, No. 24, item 397), and
also the Resolution of the Supreme Soviet of the Republic of
Armenia of October 13, 1993, "On Putting the Statute of the
Republic of Armenia 'On Enterprises Acting by Guaranty' into
Effect" (Gazette of the Supreme Soviet of the Republic of Armenia,
1993, No. 19, item 333);
6) the Statute of the Republic of Armenia of June 13, 1994,
"On the Individual (or Family) Enterprise" (Gazette of the Supreme
Soviet of the Republic of Armenia, 1994, No. 11, item 202) and
also the Resolution of the Supreme Soviet of the Republic of
Armenia of March 15, 1994, "On Putting the Statute of the Republic
of Armenia 'On the Individual (or Family) Enterprise" (Gazette of
the Supreme Soviet of the Republic of Armenia, No. 5, item 54);
7) the Statute of the Republic of Armenia of June 28, 1995,
"On Pledge" (Gazette of the Supreme Soviet of the Republic of
Armenia, 1995, No. 11-12, item 143) with further amendments and
additions and also the Resolution of the Supreme Soviet of the
Republic of Armenia of May 18, 1995, "On Putting the Statute of
the Republic of Armenia 'On Pledge' into Effect" (Gazette of the
Supreme Soviet of the Republic of Armenia," 1995, No. 10, item
128);
8) the Statute of the Republic of Armenia "On Immovable
Property" (Gazette of the National Assembly of the Republic of
Armenia, 1996, No. 1-2, item 2).
Article 3. To bring statutes and other legal acts containing
rules of civil law into agreement with the Code by July 1, 2000.
Until the bringing of statutes and other legal acts
containing norms of civil law into agreement with the Code, they
shall be applied to the extent that they do not contradict the
Code.
Normative acts of the President of the Republic of Armenia,
the Government of the Republic of Armenia, ministries and other
state bodies on questions that, according to the Code, must be
regulated only by Statute, shall be in effect until the putting of
the respective statutes into effect.
Article 4. The Code shall be applied to civil legal
relations that have arisen after the putting of the Code into
effect with the exception of cases provided by the present
Statute.
With respect to contractual and other civil legal relations
that arose before January 1, 1999, the Code shall be applied to
that part of rights and duties that arose after the putting of the
Code into effect.
Article 5. Obligations under contracts concluded before the
putting of the Code into effect shall be preserved unless the
parties voluntarily bring the provisions of these contracts into
accord with the requirements of the Code.
Article 6. From the day of putting the Code into effect
legal persons may be created exclusively in those organizational-
legal forms that are provided by Chapter 5 of the Code.
The organizational-legal forms of enterprises created before
putting the Code into effect and not provided for by Chapter 5 of
the Code are subject to reorganization and registration before
January 1, 12000. In case of non-reorganization and no
registration within the time limit indicated, they shall be
subject to reorganization.
Legal persons having an organizational legal form provided by
Chapter 5 of the Code and created before the putting of the Code
into effect, must bring their founding documents into accord with
the requirements of the rules of Chapter 5 of the Code and
reregister them before January 1, 2000. Founding documents that
are not brought into accord and are not registered within the time
limit indicated shall be considered as invalid.
Article 7. The legal persons indicated in Article 6 of the
present Statute, shall be freed from payment of registration fees
upon reregistration for the purpose of bringing their legal status
into accord with the rules of the Code.
Article 8. The existing procedure for registration of legal
persons shall be retained until the putting of the statute on
state registration of legal persons into effect.
Article 9. The existing procedure for registration of
property shall be retained until the putting of the statute on
state registration of rights to property into effect.
Article 10. The rules of the Code on the bases and
consequences of invalidity of transactions shall be applied to
transactions, demands for the recognition of which as invalid are
considered by a court, including a private arbitration court,
after January 1, 1999, regardless of the time of making the
respective transactions.
Article 11. The periods of limitation of actions established
by the Code shall be applied to those claims, the periods of
making which provided by legislation previously in effect have not
expired before January 1, 1999.
The period of limitation of actions established for the
respective claim by the legislation previously in effect shall be
applied to claim provided for by Article 317 of the Code for the
recognition of an avoidable transaction as invalid and the
application of the consequences of its invalidity .
Article 12. The effect of Article 187 of the Code
(acquisitive prescription) shall extend also to cases when the
possession of the property began before January 1, 1999, and
continued to the time of putting the Code into effect.
Article 13. The procedure and form for the making of
contracts of individual types shall be applied to contracts offers
to conclude which are sent after January 1, 1999.
The rules of the Code establishing the content of contracts
of individual types shall be applied to contracts concluded after
putting the Code into effect.
Article 14. Rules of the Code obligatory for the parties to
a contract on the bases, consequences, and procedure for
rescission of contracts of individual types shall be applied also
to contracts that continue to be in effect after the putting of
the Code into effect regardless of the date of their making.
Rules of the Code obligatory for the parties to a contract on
liability for the breach of contractual obligations shall be
applied after the respective violations were committed after the
putting of the Code into effect, with the exception of cases when
in contracts concluded before January 1, 1999, different liability
is provided for such breaches.
Article 15. The effect of Paragraphs 2 and 3 of Article 903
of the Code shall also extend to cases when monetary assets were
received in deposits before the putting of the Code into effect
and the relations that have arisen in effect with this are
maintained after the putting of the Code into effect.
Article 16. The effect of Articles 1063 and 1064 of the Code
shall also extend to cases when the causing of the harm took place
before January 1, 1999, but not earlier that January 1, 1996.
Article 17. The effect of Articles 1078-1087 of the Code
shall also extend to cases when the causing of the harm to the
life or health of a citizen took place before January 1, 1999, but
not before January 1, 1996.
Article 18. The rules of Division 11 of the Code shall be
applied also with respect to those inheritances that were opened
before the putting of the Code into effect, but which were not
accepted by any of the heirs and had not gone by right of
inheritance into the ownership of the state or commune before
January 1, 1999.
PRESIDENT
OF THE REPUBLIC OF ARMENIA R. Kocharian
July 14, 1998
City of Yerevan
ZR-229
CIVIL CODE OF THE
REPUBLIC OF ARMENIA
(Adopted by the National Assembly of the Republic of Armenia in
Third Reading, May 5, 1998)
English Translation by 1998 Peter B. Maggs, Anna S. Tarassova and
Alexei N. Zhiltsov
YEREVAN 1998
Translation Copyright (c) 1998 P.B. Maggs, A.S. Tarassova &
A.N. Zhiltsov
CIVIL CODE OF THE
REPUBLIC OF ARMENIA
DIVISION 1. GENERAL PROVISIONS
Chapter 1. Civil Legislation and Other Legal Acts Containing
Norms of Civil Law
Article 1. Relations Regulated by Civil Legislation and by
Other Legal Acts Containing Norms of Civil Law
1. The civil legislation of the Republic of Armenia consists
of the present Code and other statutes containing norms of civil
law.
Norms of civil law contained in other statutes must
correspond to the present Code.
2. Civil legislation and also edicts of the President of the
Republic of Armenia and decrees of the Government of the Republic
of Armenia containing norms of civil law (hereinafter – other
legal acts) determine the legal status of the participants in
civil commerce, the bases for the origin and the procedure for the
exercise of the right of ownership and other property rights, of
exclusive rights to the results of intellectual activity
(intellectual property), regulate contractual and other
obligations and also other property relations and personal non-
property relations related to them.
The participants in relations regulated by civil legislation
and other legal acts are physical persons (hereinafter—citizens)
and legal persons and also the Republic of Armenia and communes
(Art. 128).
The rules established by civil legislation and other legal
acts shall be applied to relations with the participation of
foreign citizens, persons without citizenship and foreign legal
persons, unless otherwise provided by a statute.
3. Civil legislation and other legal acts regulate relations
among persons, conducting entrepreneurial activity or with their
participation.
4. Family and labor relations, relations for the use of
natural resources and for the protection of the environment are
regulated by civil legislation and other legal acts unless family,
labor, land, nature protection, or other specialized legislation
provides otherwise.
5. Relations connected with the exercise and protection of
the inalienable rights and freedoms of man and other nonmaterial
values are regulated by civil legislation and other legal acts,
unless it otherwise follows from the nature of these relations.
6. Civil legislation and other legal acts are not applied to
property relations based on administrative or other authoritative
subordination of one party to another, including tax, finance, and
administrative relations, unless otherwise provided by
legislation.
Article 2. Entrepreneurial Activity
Entrepreneurial activity is independent activity by a person
conducted at its own risk following as a basic purpose the
realization of profit from the use of property, sale of goods,
performance of work, or rendering of services.
Article 3. Basic Principles of Civil Legislation
1. Civil legislation is based on the principles of equality,
autonomy of will, and property independence of the participants in
the relations regulated by it, the inviolability of ownership,
freedom of contract, impermissibility of arbitrary interference by
anyone in private affairs, the necessity of the unhindered
exercise of civil law rights, the guaranty of restoration of
violated rights and their judicial protection.
2. Citizens and legal persons obtain and exercise their
civil law rights by their own will and in their own interest. The
are free in the establishment of their rights and duties on the
basis of contract and in determining any conditions of contract
not contradictory to legislation.
Civil law rights may be limited only by statute, if this is
necessary for the purpose of defending state and societal
security, social order, the health and morals of society, the
defense of the rights and freedoms, honor and good name of other
persons.
3. Goods, services and financial assets may be freely moved
about on the whole territory of Republic of Armenia.
Limitations of the movement of goods and services may be
introduced in accordance with statute if this is necessary to
guaranty safety, defense of the life and health of people,
protection of nature and of cultural values.
Article 4. Other Legal Acts
1. In accordance with Article 78 of the Constitution of the
Republic of Armenia, within the period established by the National
Assembly of the Republic of Armenia, the relations indicated in
Article 1 of the present Code may also be regulated by decrees of
the Government of the Republic of Armenia having the force of a
staute.
2. On the basis of and in the fulfillment of the present
Code and other statutes, the President of the Republic of Armenia
has the right to adopt edicts containing norms of civil law.
3. On the basis of and in fulfillment of the present Code
and other statutes and edicts of the President of the Republic of
Armenia, the Government of the Republic of Armenia has the right
to adopt decrees containing norms of civil law.
4. In case of contradiction between an edict of the
President of the Republic of Armenia or a decree of the Government
of the Republic of Armenia and the present Code or other statute,
the present Code or respective statute shall be applied.
5. The effectiveness and application of norms of civil law
contained in edicts of the President of the Republic of Armenia
and decrees of the Government of the Republic of Armenia shall be
determined by the rules of the present Chapter.
6. Ministries and other agencies of executive authority and
also bodies of local self-government may issue acts containing
norms of civil law only in the cases and within the limits
provided by the present Code, other statutes and legal acts.
Article 5. The Effect of Civil Legislation and Other Legal
Acts in Time
1. Acts of civil legislation and other legal acts do not
have retroactive force and are applied to relations that have
arisen after they were put into effect.
The effect of a statute extends to relations that arose
before it was put into effect only in the cases when this is
directly provided by statute.
2. With respect to relations that arose before the putting
into effect of an act of civil legislation or other legal act, it
is applied to rights and duties that arose after it was put into
effect. Relations of parties under a contract concluded before an
act of civil legislation or other legal act was put into effect
are regulated in accordance with Article 438 of the present Code.
Article 6. Civil Legislation, Other Legal Acts and
International Treaties
1. International treaties of the Republic of Armenia are
applied to relations indicated in Article 1 of the present Code
directly, except in cases when, from the international treaty, it
follows that the issuance of an internal state act is required for
its application.
2. If an international treaty of the Republic of Armenia
establishes norms other than those that are provided by civil
legislation and legal acts, the norms of the international treaty
are applied.
Article 7. Customs of Commerce
1. A custom of commerce is a rule of conduct in any area of
entrepreneurial activity that has taken form and is widely
applied, and that is not provided by legislation, regardless of
whether or not it has been fixed in any document.
2. Customs of commerce contradicting obligatory provisions
of legislation or contract shall not be applied.
Article 8. Interpretation of Civil Law
Civil law norms must be interpreted in accordance with the
literal sense of the words and expressions contained therein.
In case of differing meaning of words and expressions used in
the text of legal norms, preference shall be given to the meaning
corresponding to the principles of civil legislation stated in
Paragraph 1 of Article 3 of the Present Code.
Article 9. Application of Civil Law Norms by Analogy
1. In cases when the relations indicated in Article 1 of the
present Code are not directly regulated by statute or agreement of
the parties and there is no custom of commerce applicable to them,
then, to such relations, if it does not contradict their nature,
norms of civil legislation regulating similar relations (analogy
of statute) shall be applied.
2. In case of impossibility of use of analogy of statute,
the rights and duties of the parties shall be determined
proceeding from the principles of civil legislation (analogy of
law).
3. It is not permitted to apply by analogy norms limiting
civil law rights or establishing liability.
Chapter 2. The Origin of Civil Law Rights and Duties.
Exercising Civil Law Rights
Article 10. Bases for the Origin of Civil Law Rights and
Duties
1. Civil law rights and duties arise from bases provided by
statute and other legal acts, and also from the activities of
citizens and legal persons, which although not provided by statute
or other legal acts, but by the effect of the principles of civil
legislation engender civil law rights and duties.
In accordance with this, civil law rights and duties arise:
1) from contracts and other transactions provided for by law
and also from contracts and other transactions that, although not
provided for by law, do not contradict it;
2) from acts of state bodies, and bodies of local self-
government that are provided for by statute as a basis for the
origin of civil law rights and duties;
3) from a judicial act that has established civil law rights
and duties;
4) as the result of obtaining property on bases permitted by
statute;
5) as the result of the creation of works of scholarship,
literature, or art, of inventions, and of other results of
intellectual activity;
6) as the result of causing harm to another person;
7) as the result of unjust enrichment;
8) as the result of other activities of citizens and legal
persons;
9) as the result of events with which a statute or other
legal act connects the occurrence of civil-law consequences.
2. Property rights subject to state registration arise from
the time of their registration.
Article 11. Exercise of Civil Law Rights
1. Citizens and legal persons at their discretion exercise
the civil law rights belonging to them, including the right to
their defense.
2. Refusal by citizens or legal persons to exercise rights
belonging to them shall not entail termination of these rights,
with the exception of cases provided for by statute.
Article 12. Limits of Exercise of Civil Law Rights
1. Actions of citizens and legal persons exercised
exclusively with the intention to cause harm to another person are
not allowed, nor is abuse of a legal right allowed in other forms.
Use of civil law rights for the purpose of restricting
competition is not permitted, nor is abuse of a dominant position
in the market.
2. In case of failure to observe the requirements provided
by Paragraph 1 of the present Article, the court, commercial
court, or arbitration tribunal (hereinafter--“court”) may refuse
the person protection of the right belonging to it.
Chapter 3. Protection of Civil Law Rights
Article 13. General Provisions
1. Protection of civil law rights shall be conducted by a
court, in accordance with the jurisdiction over cases established
by the Civil Procedure Code of the Republic of Armenia.
2. A contract may provide for regulation of a dispute among
the parties before going to a court.
3. Protection of civil law rights by an administrative
procedure shall be conducted only in cases provided for by
statute. A decision taken by an administrative procedure may be
protested in court.
Article 14. Means of Protection of Civil Law Rights
The protection of civil law rights shall be conducted by way
of:
1) recognition of a right;
2) reinstating the situation that existed before the
violation of the right,
3) stopping the activities that violated the right or created
a threat of its violation;
4) applying the consequences of the invalidity of a void
transaction;
5) recognizing an avoidable transaction as invalid and
application of the consequences of its invalidity;
6) recognition of an act of a state body or of a body of
local self-government as invalid;
7) non-application by the court of an act of a state body or
of a body of local government that contradicts a statute;
8) self-protection of a right;
9) a judgment for specific performance of an obligation;
10) compensation for losses;
11) award of a penalty;
12) termination or alteration of a legal relation;
13) by other means provided by statute.
Article 15. Recognition of the Invalidity of an Act of a
State Body or of a Body of Local Self-Government
1. An act of a state body or of a body of local self-
government not corresponding to a statute or other legal acts and
violating civil law rights or other interests protected by statute
of a citizen or legal person may be recognized as invalid by a
court.
In case of recognition by a court of an act as invalid, the
violated right is subject to protection in the other manners
provided by Article 14 of the present Code.
The Constitutional Court of the Republic of Armenia, in accordance
with Article 100 of the Constitution of the Republic of Armenia,
shall determine the correspondence of statutes, resolutions of the
National Assembly of the Republic of Armenia, edicts and orders of
the President of the Republic of Armenia, and decrees of the
Government of the Republic of Armenia to the Constitution of the
Republic of Armenia.
Article 16. Self-Protection of Civil Law Rights
A person has the right to self-protection of civil law rights
by all means not forbidden by statute.
The means of self-protection must be proportional to the
violation and not go outside the bounds of the actions necessary
for stopping the violation.
Article 17. Compensation for Losses
1. A person whose right has been violated may demand full
compensation for the losses caused to it unless statute or
contract provides for compensation lossesa lesser amount.
2. Losses means the expenses that the person whose right was
violated made or must make to reinstate the right that was
violated, the loss of or injury to his property (actual damage),
and also income not received that this person would have received
under the usual conditions of civil commerce if his right had not
been violated (forgone benefit benefit).
If the person who has violated a right has received income as
thereby, the person whose right has been violated has the right to
demand compensation along with other lossess for forgone benefit
in a measure not less than such income.
Article 18. Compensation for Damage Caused by State Bodies
and Bodies of Local Self-Government
Damages caused to a citizen or legal person as the result of
illegal actions (or non-actions) of state bodies, bodies of local
self-government, or officials of these bodies, including the
promulgation of an act of a state body or body of local self-
government that does not correspond to statute or other legal act,
are subject to compensation by the Republic of Armenia or the
respective commune.
Article 19. Protection of Honor, Dignity, and Business
Reputation
1. A citizen has the right to demand in court the retraction
of communications impugning on his honor, dignity, or business
reputation, unless the person who disseminated such communications
proves that they correspond to reality.
On demand of interested persons, the protection of honor and
dignity of a citizen is permitted also after his death.
2. If the communications impugning the honor, dignity, or
business reputation of a citizen were distributed in media of mass
information, they must be retracted in the same media of mass
information.
If the aforementioned communications are contained in a
document emanating from an organization, such a document is
subject to replacement or recall.
The procedure for retration in other cases shall be
established by the court.
3. A citizen with respect to whom a medium of mass
information has published communications infringing on his rights
or interests protected by statute has the right to publication of
his answer in the same medium of mass information.
4. A citizen with respect to whom communications have been
disseminated impugning his honor, dignity, or business reputation,
has the right together with the retraction of such information
also to demand compensation for the damages caused by their
dissemination.
5. If it is impossible to identify the person who
disseminated comunications impugning the honor, dignity, or
business reputation of a citizen, the person with respect to whom
such information was disseminated has the right to apply to court
with a request for the recognition of the communications that were
disseminated as not corresponding to reality.
6. The rules of the present article on the protection of the
business reputation of a citizen shall be applied correspondingly
to the protection of the legal reputation of a legal person.
DIVISION 2. PERSONS (SUBJECTS OF CIVIL LAW RIGHTS)
Chapter 4. Citizens
Article 20. The Legal Capacity of a Citizen
1. The ability to have civil rights and bear duties (civil
legal capacity) is recognized in equal measure for all citizens.
2. The legal capability of a citizen arises from the time of
his birth and is terminated by death.
Article 21. The Content of the Legal Capacity of Citizens
Citizens may:
1) have property by right of ownership;
2) inherit and will property;
3) engage in entrepreneurial and any other activity not
forbidden by statute;
4) create a legal person independently or jointly with other
citizens and legal persons;
5) conclude transactions not contrary to statute and
participate in obligations;
6) select a place of residence;
7) have the rights of the creator of works of science,
literature, and art, inventions, and other results of
intellectual activity protected by statute;
8) have other property and personal non-property rights.
Article 22. The Name of a Citizen
1. A citizen obtains and exercises rights and duties under
his own name, including his family name and given name, and also,
if he wishes, a patronymic.
In cases and by the procedure provided by statute, a citizen
may use a pseudonym (made-up name).
2. A citizen has the right to change his name by the
procedure established by statute. Change of name by a citizen is
not a basis for terminating or changing his rights and duties
obtained under the previous name.
A citizen is obligated to notify his debtors and creditors of
the change of his name and bears the risk of consequences caused
if these persons lack information on his change of name.
A citizen who has changed his name has the right to demand
the entry, at his expense, of the respective changes in documents
formalized in his former name.
3. The name obtained by a citizen at birth and also a change
of name are subject to registration by the procedure established
for registration of acts of civil status.
4. Obtaining rights and duties under the name of another
person is not permitted.
5. Harm caused to a citizen as the result of improper use of
his name is subject to compensation in accordance with the present
Code.
In case of distortion or use of the name of a citizen in ways
or in a form that impinges upon his honor, dignity, or business
reputation, the rules provided by Article 19 of the present Code
shall be applied.
Article 23. Place of Residence of a Citizen
1. The place of residence is the place where a citizen
permanently or primarily lives.
2. The place of residence of minors who have not attained
the age of fourteen years or of citizens who are under
guardianship is the place of residence of their legal
representatives--parents, adoptive parents or guardians.
Article 24. The Dispositive Capacity of a Citizen
1. The capacity of a citizen by his actions to obtain and
exercise civil law rights, to create for himself civil law duties
and to fulfill them (civil law dispositive capacity) arises in
full with the attainment of majority, i.e., on the attainment of
the age of eighteen.
2. A minor who has attained the age of sixteen may be
recognized as of full dispositive capacity if he works under a
labor contract or, with the agreement of his parents, adoptive
parents, or curator, engages in entrepreneurial activity.
The recognition of a minor as of full dispositive capacity
(emancipation) is made by decision of the agency of curatorship
and guardianship--with the consent of both parents, the adoptive
parents, or the curator or, in the absence of such consent, by
decision of the court.
The parents, adoptive parents, and guardian do not bear
responsibility for the obligations of a minor recognized as of
full dispositive capacity, in particular for obligations arising
as the result of his causing harm.
3. In the case when a statute permits entry into marriage
before attaining the age of eighteen, a citizen, who has not
attained the age of eighteen, obtains dispositive capacity in full
from the time of entry into marriage.
Dispositive capacity obtained as the result of conclusion of
marriage is retained in full also in case of dissolution of the
marriage before attaining the age of eighteen.
In case of recognition of a marriage as invalid, the court my
adopt a decision on the loss by the minor spouse of full
dispositive capacity from a time determined by the court.
Article 25. Impermissibility of Deprivation or Limitation of
the Legal Capability and Dispositive Capacity of a Citizen
1. A citizen may not be limited in legal capacity or
dispositive capability other than in the cases and by the
procedure established by statute.
2. Nonobservance of the conditions and procedure established
by statute for the limitation of the dispositive capacity of
citizens or of their right to engage in entrepreneurial or other
activity shall entail the invalidity of the act of the state or
other body that has established the respective limitation.
3. A full or partial renunciation by a citizen of legal
capability or dispositive capacity, or other transactions directed
at the limitation of legal capability or dispositive capacity, are
void.
Article 26. Entrepreneurial Activity of a Citizen
1. A citizen has the right to create business organizations
or to be a participant in them for the conduct of entrepreneurial
activity.
2. A citizen has the right to engage in entrepreneurial
activity without the formation of a legal person from the time of
state registration as an individual entrepreneur.
3. The rules of the present Code that regulate the activity
of legal persons that are commercial organizations shall be
applied to entrepreneurial activity of citizens conducted without
the formation of a legal person, unless it otherwise follows from
a statute, other legal acts or the nature of the legal
relationship.
4. A court may apply the rules of the present Code on
obligations connected with the conduct of entrepreneurial activity
to transactions of a citizen who is conducting entrepreneurial
activity in violation of the requirements of Paragraphs 1 and 2 of
the present Article.
Article 27. Property Liability of a Citizen
A citizen is liable for his obligations with all property
belonging to him, with the exception of property upon which, in
accordance with statute, execution cannot be levied.
Article 28. Bankruptcy of a Citizen
1. A citizen, including an individual entrepreneur, by
decision of a court may be recognized as bankrupt if he is not in
a position to satisfy the demands of creditors.
2. The bases and procedure for recognition by a court of a
citizen as bankrupt shall be established by the Civil Procedure
Code of the Republic of Armenia.
3. In case of recognition of a citizen as bankrupt, the
claims of creditors not satisfied because of the absence or
insufficiency of his property shall remain in effect until their
full satisfaction.
Article 29. Dispositive Capacity of Minors up to the Age of
14
1. For minors who have not attained the age of fourteen
years (infants), transactions with the exclusion of those
indicated in Paragraph 2 of the present Article may be conducted
in their name only by their parents, adoptive parents, or
guardians.
2. Minors of the age of six to fourteen years have the right
to independently conduct:
1) very small everyday transactions;
2) transactions directed at obtaining a cost-free benefit
requiring neither notarial authentication nor state registration
of rights arising from these transactions;
3) transactions for disposition of assets provided by the
legal representative or, with the consent of the latter, by a
third person, for a particular purpose or for free disposition.
3. Property liability under transactions of an infant,
including for transactions conducted by him independently is borne
by his parents, adoptive parents, or guardian, unless they prove
that the obligation was violated without their fault. These
persons, in accordance with statute, also are liable for harm
caused by minors.
Article 30. Dispositive Capacity of Minors of the Age of
Fourteen to Eighteen Years
1. Minors of the age of fourteen to eighteen years, conduct
transactions, with the exception of those listed in Paragraph 2 of
the present Article with the written consent of their legal
representatives--parents, adoptive parents, or curator.
A transaction conducted by such a minor also is valid in case
of its later written approval by his parents, adoptive parents, or
curator.
2. Minors of the age of fourteen to eighteen years have the
right, independently, without the consent of parents, adoptive
parents, or curator:
1) to dispose of their wages, scholarship, and other income;
2) to exercise the rights of a creator of a work of
scholarship, literature, or art, of invention, or of other result
of intellectual activity protected by statute;
3) in accordance with statute, to make deposits in credit
institutions and to dispose of them;
4) to conduct small everyday transactions and other
transactions provided by Paragraph 2 of Article 29 of the present
Code.
Upon attaining sixteen years, minors also have the right to
be a member of a cooperative in accordance with the statutes on
cooperatives.
3. Minors of the age of fourteen to eighteen years
independently bear property liability for transactions conducted
by them in accordance with Paragraphs 1 and 2 of the present
Article. For harm caused by them, the minors also bear liability
in accordance with the present Code.
4. Where sufficient bases are present, a court on petition
of parents, adoptive parents, or a curator or of an agency of
guardianship and curatorship may limit or deprive a minor of the
age of fourteen to eighteen years of the right to independently
dispose of his wages, scholarship, or other income, with the
exception of cases when such minor obtained dispositive capacity
in full in accordance with Paragraphs 2 and 3 of Article 24 of the
present Code.
Article 31. Recognition of a Citizen as Lacking Dispositive
Capacity
1. A citizen who as the result of mental disorder cannot
understand the significance of his actions or control them may be
recognized by a court as lacking dispositive capacity by the
procedure established by the Civil Procedure Code of the Republic
of Armenia. Guardianship shall be established over him.
2. Transactions in the name of a citizen who has been
recognized as lacking dispositive capacity shall be made by his
guardian.
3. If the bases by virtue of which a citizen was recognized
as lacking dispositive capacity have ceased to exist, the court
shall recognize him as having dispositive capacity. On the basis
of the decision of the court the guardianship established over him
shall be terminated.
Article 32. Limitation of the Dispositive Capacity of a
Citizen
1. A citizen who, as the result of abuse of liquor or
narcotic substances or engaging ingames of chance, puts his family
in a difficult financial situation, may be limited by a court in
dispositive capacity by the procedure established by the Civil
Procedure Code of the Republic of Armenia. Curatorship shall be
established over him.
He has the right to conduct small everyday transactions
independently.
He may conduct other transactions and also receive wages, a
pension, and other income and dispose of them only with the
consent of the curator. However, such a citizen independently
bears property liability for transactions conducted by him and for
harm caused by him.
2. If the bases, by virtue of which the citizen was limited
in dispositive capacity no longer exist, the court shall terminate
the limitation of his dispositive capacity. On the basis of a
decision of the court, the curatorship established over the
citizen is terminated.
Article 33. Guardianship and Curatorship
1. Guardianship and curatorship are established for the
protection of the rights and interests of citizens lacking
dispositive capacity or not of full dispositive capacity.
Guardianship and curatorship over minors is established also for
the purpose of their upbringing. The corresponding rights and
duties of guardians and curators are established by the Family
Code of the Republic of Armenia.
2. Guardians and curators act in protection of the rights
and interests of their wards in relations with any persons,
including in courts, without special authorization.
3. Guardianship and curatorship over minors shall be
established if they lack parents or adoptive parents, if a court
has deprived the parents of parental rights, and also in cases
when such citizens for other reasons have been left without
parental curatorship, in particular when parents avoid their
upbringing or the protection of their rights and interests.
Article 34. Guardianship
1. Guardianship is established over minors who have not
attained fourteen years and also over citizens recognized by a
court as lacking dispositive capacity as the result of mental
disorder.
2. Guardians are representatives of the wards by force of
statute and conduct all necessary transactions in their names and
in their interests.
Article 35. Curatorship
1. Curatorship is established over minors of the age of
fourteen to eighteen years, and also over citizens limited by a
court in dispositive capacity as the result of abuse of liquor or
narcotic substances, or engaging in games of chance.
2. Curators give consent to the conduct of those
transactions that citizens who are under curatorship do not have
the right to conduct independently.
Curators render aid to wards in their exercise of their
rights and the performance of duties and also protect them from
abuses on the part of third persons.
Article 36. Agencies of Guardianship and Curatorship
1. Agencies of guardianship and curatorship are established
by statute.
2. A court is obligated within three days from the day of
entry into legal force of a decision on the recognition of a
citizen as lacking dispositive capacity or of limiting his
dispositive capacity to report this to the agency of guardianship
and curatorship at the place of residence of such a citizen for
the establishment of guardianship or curatorship over him.
3. The agency of guardianship and curatorship at the place
of residence of the wards shall conduct supervision of the
activity of their guardians and curators.
Article 37. Guardians and Curators
1. A guardian or curator is appointed by the agency of
guardianship and curatorship at the place of residence of the
persons needing guardianship or curatorship within a month from
the time when the aforesaid agency became aware of the necessity
of establishment of guardianship or curatorship over a citizen.
Until the appointment of a guardian or curator for the person
needing guardianship or curatorship, the performance of the
obligations of the guardian or curator shall be conducted by the
agency of guardianship or curatorship.
The appointment of a guardian or curator may be protested in
court by interested persons.
2. Adult citizens with dispositive capacity may be appointed
as guardians and curators. Citizens deprived of parental rights
may not be appointed as guardians and curators.
3. A guardian or curator shall be appointed with his
consent. His moral and other personal qualities, ability for
performing the duties of guardian or curator, the relations
existing between him and the person needing guardianship or
curatorship, and if this is possible--also the wish of the ward
must be considered.
4. The guardians and curators of citizens needing
guardianship or curatorship and being located or placed in
respective educational or therapeutic institutions, institutions
of social defense of the public, or other analogous institutions,
are these institutions.
Article 38. Performance by Guardians and Curators of Their
Obligations
1. Obligations for guardianship and curatorship are
performed without compensation, except in cases provided by
statute.
2. Guardians and curators of minor citizens are obligated to
live together with their wards. Separate residence of a curator
from a ward who has attained the age of sixteen is permitted with
the consent of the agency of guardianship and curatorship on the
condition that this is not reflected unfavorably on the upbringing
and protection of the rights and interests of the ward.
The guardians and curators are obligated to notify the
agencies of guardianship and curatorship on change of place of
residence.
3. Guardians and curators are obligated to take care for the
support of their wards, on ensuring their care and medical
treatment, their education and upbringing, protection of their
rights and interests.
4. The duties indicated in Paragraph 3 of the present
Article are not imposed upon curators of adult citizens limited by
a court in dispositive capacity.
5. If the bases by virtue of which a citizen has been
recognized as lacking dispositive capacity or of limited
dispositive have ceased to exist, the guardian or curator is
obligated to petition a court for the recognition of the ward as
having dispositive capacity and of the removal of guardianship or
curatorship from him.
Article 39. Disposition of the Property of the Ward
1. Income of the citizen under wardship including income due
the ward from the administration of his property, with the
exception of the income that the ward has the right to dispose of
independently is expended by the guardian or curator exclusively
in the interests of the ward and with the preliminary consent of
the agency of guardianship and curatorship.
The guardian or curator has the right to make the
expenditures necessary for the support of the ward at the expense
of amounts due the ward as his income, without the prior consent
of the agency of guardianship and curatorship.
2. The guardian does not have the right, without the prior
consent of the agency of guardianship and curatorship to conclude,
nor a curator--to give consent to the conclusion of, transactions
for the alienation, including the exchange or gift of property of
the ward, to give it out in lease, for uncompensated use, in
pledge, nor of transactions involving a waiver of rights belonging
to the ward, nor the division of his property nor separation of
shares from it, nor to any other transactions involving the
reduction of the property of the ward.
The procedure for administration of the property of the ward
shall be determined by statute.
3. The guardian, the curator, their spouses, and their close
relatives do not have the right to conclude transactions with a
ward, with the exception of the transfer of property to the ward
as a gift or for cost-free use, nor to represent the ward in the
conclusion of transactions or the conduct of judicial proceedings
between the ward and spouse of the guardian or curator and their
close relatives.
Article 40. Entrusted administration of the Property of the
Ward
1. In case of necessity of permanent administration of
immovable or valuable movable property of the ward, the agency of
guardianship and curatorship concludes with an administrator,
designated by this agency, a contract on entrusted administration
of this property. In this case the guardian or ward retains his
powers with respect to the property of the ward that was not given
to entrusted administration.
In the exercise of powers for the entrusted administraiton of
the property of the ward, the effect of the rules provided by
Paragraphs 2 and 3 of Article 39 of the present Code extend to the
administrator.
2. Entrusted administraiton of the property of the ward
shall be terminated on the bases provided by statute for
termination of a contract for entrusted administraiton of property
and also in case of termination of guardianship or curatorship.
Article 41. Freeing and Removing Guardians and Curators From
the Performance by them of Their Obligations
1. An agency of guardianship and curatorship shall free a
guardian or curator from performing his duties in cases of return
of the minor to his parents or his adoption.
2. In case of placement of the ward in a respective
educational or therapeutic institution, institution of social
protection of the public, or other analogous institution, the
agency of guardianship and curatorship shall free an earlier
appointed guardian or curator from performing his duties, unless
this contradicts the interests of the ward.
3. If there are compelling reasons (illness, change in
financial status, absence of mutual understanding with the ward,
etc.), the guardian or curator may be freed from performing his
obligations on his request.
4. In cases of improper performance by the guardian or
curator of the obligations imposed upon him, including in case of
his use of guardianship or curatorship for selfish reasons or in
case of leaving the ward without supervision or the necessary
help, the agency of guardianship and curatorship may remove the
guardian or curator from performing these dutiess and take the
necessary measures for bringing the guilty citizen to the
responsibility established by statute.
Article 42. Termination of Guardianship and Curatorship
1. Guardianship and curatorship over adult citizens shall be
terminated in case a court has rendered a decision to recognize
the ward as having dispositive capacity or to terminate
limitations upon his dispositive capacity upon petition of the
guardian, curator, or agency of guardianship and curatorship.
2. Upon attainment by an infant of the age of fourteen
years, guardianship over him shall be terminated, and the citizen
conducting the duties of guardian becomes curator of the minor
without a further decision to this effect.
3. Curatorship over a minor shall be terminated without a
special decision upon the minor ward attaining the age of eighteen
years, and also upon his entry into marriage and in other cases of
his obtaining full dispositive capacity before attaining majority
(Paragraph 2 and 3 of Article 24).
Article 43. Patronage Over a Citizen With Dispositive
Capacity
1. On the request of an adult citizen with dispositive
capacity, who due to the condition of health cannot independently
exercise and protect his rights and perform his duties, patronage
may be established over him.
2. The establishment of patronage does not entail limitation
of the rights of the citizen.
2. The patron (helper) of the adult citizen with dispositive
capacity shall be named by the agency of curatorship and
curatorship with the consent of theiscitizen.
3. Disposition of the property belonging to an adult citizen
with dispositive capacity shall be conducted by the patron
(helper) on the bases of a contract of agency or entrusted
administration made with the ward. The conclusion of everyday and
other transactions directed at the support and the satisfaction of
everyday needs shall be conducted by the patron (helper) with the
consent of the citizen.
4. Patronage established in accordance with Paragraph 1 of
the present Article over an adult citizen with dispositive
capacity shall be terminated upon demand of the citizen who is
under patronage.
The patron (helper) of the citizen who is under patronage,
shall be freed from fulfillment of his duties in the cases
provided by Article 41 of the present Code.
Article 44. Recognition of a Citizen as Missing
A citizen may, upon request of interested persons, be
recognized by a court as missing, if in the course of a year, at
the place of his residence, there is no information on the place
where he is.
In case it is impossible to determine the day of receipt of
the last information on the missing person, the start of the
calculation of the term for recognition as missing is considered
the first day of the month after that in which the last
information on the missing person was received, and in case it is
impossible to determine this month--the first of January of the
following year.
Article 45. Consequences of Recognition of a Citizen as
Missing
1. The property of a citizen recognized as missing, in case
of the necessity of constant administration of it shall be
transferred on the basis of a decision of the court to a person
who shall be determined by the agency of guardianship and
curatorship and who shall act on the basis of contract of
entrusted administraiton made concluded with this agency.
2. The administrator of the property of the person
recognized as missing shall pay his debts at the expense of the
property of the absent person, shall administer the property in
the interests of this person, and shall provide support for the
citizens whom the missing person was obligated to support.
3. The agency of guardianship and curatorship may even
before the expiration of a year from the day of receipt of the
last information on the place of location of the missing citizen
on the basis of a decision by the court appoint an administrator
for his property.
4. If upon the expiration of three years from the day of
appointment of an administrator the decision of a court on the
recognition of a person as missing has not been vacated and there
has not been an application to the court for the recognition of
the citizen as dead, the agency of guardianship and curatorship is
obligated to apply to court with a request for the recognition of
the citizen as dead.
5. The consequences of recognition of a person as missing
not provided by the present Article are determined by statute.
Article 46. Consequences of Vacating a Decision to Recognize
a Citizen as Missing
In case of the appearance or of the discovery of the place of
location of a citizen who has been recognized as missing, the
court shall vacate a decision on recognition of him as missing.
On the basis of the decision of the court, the entrusted
administraiton of the property of this citizen is terminated.
Article 47. Declaration of a Citizen as Dead
1. A citizen may be declared dead by a court, if at the
place of his residence there is no information on the place of his
location during three years or, if he disappeared under
circumstances threatening death or giving a basis to assume his
loss from a specific accident, during six months.
2. A military serviceman or other citizen who has
disappeared in connection with military actions may be recognized
as dead by a court not earlier than after the expiration of two
years from the day of the end of the military actions.
3. The day of the death of the citizen who is recognized as
dead shall be considered to be the day of entry into legal force
of the decision of the court recognizing him as dead. In case of
recognition of a citizen as dead who disappeared under
circumstances threatening death or giving a basis to assume his
loss from a specific accident, the court may recognize as the day
of death of this citizen the day of his supposed loss.
Article 48. Consequences of the Appearance of a Citizen Who
has been Recognized as Dead
1. In case of the appearance or of the discovery of the
place of location of a citizen who has been recognized as dead,
the court shall vacate the decision on recognizing him as dead.
2. Regardless of the time of his appearance, the citizen may
demand from any person the return of property still preserved,
which passed without compensation to this person after the
recognition of the citizen as dead, with the exception of the
cases provided by Paragraph 3 of Article 275 of the present Code.
3. Persons to whom the property of a citizen who has been
recognized as dead has passed under compensated transactions are
obligated to return this property to him if it is proved that, in
obtaining this property they knew that the citizen who was
recognized as dead was among the living. In case of impossibility
of return of such property in kind, its value shall be compensated
for.
4. If the property of a citizen who has been recognized as
dead has passed by right of inheritance to the commune and has
been sold with observance of the conditions provided by the
present Article, then after the vacating of the decision on the
recognition of the citizen as dead, the amount received from the
sale of the property shall be returned to him.
Article 49. Registration of Acts of Civil Status
1. The following acts of civil status are subject to state
registration:
1) birth;
2) marriage
3) dissolution of marriage;
4) adoption of a son (or daughter)
5) establishment of paternity
6) change of name
7) death of a citizen.
2. Registration of acts of civil status shall be done by the
agencies of registration of acts of civil status by entry of the
respective records in the books of registration of acts of civil
status (the books of acts) and issuance to citizens of
certificates on the basis of these records.
3. The correction and change of records of acts of civil
status shall be made by the agencies of registration of acts of
civil status if there are sufficient bases and there is no dispute
among interested persons.
If there is a dispute among interested persons or a refusal
of an agency of registration acts of civil status to correct or
change a record, the dispute shall be decided by a court.
The annulment and reinstatement of records of acts of civil
status shall be done by the agency of registration of acts of
civil status on the basis of a decision of a court.
4. The agencies conducting registration of acts of civil
status, the procedure for registration of these acts, the
procedure for change, reinstatement and annulling of records of
acts of civil status, the forms of the books of acts and the
certificates and also the procedures and the lengths of time for
keeping the books of acts shall be determined by the statute on
acts of civil status.
Chapter 5. Legal Persons
§ 1. Basic Provisions
Article 50. Definition of a Legal Person
1. A legal person is an organization that has separate
property under ownership and that is liable for its obligations
with this property and that may, in its own name, obtain and
exercise property and personal nonproperty rights, bear duties,
and be a plaintiff and defendant in court.
A legal person must have an independent balance sheet.
2. In connection with participation in the formation of the
property of a legal person, its founders (or participants) have or
do not have rights under the law of obligations with respect to
this legal person.
Legal persons with respect to which their founders (or
participants) have rights under the law of obligations include:
business partnerships and companies, and also cooperatives.
Legal persons with respect to which their founders do not
have rights under the law of obligations include: societal
amalgamations, funds, and unions of legal persons.
Article 51. Types of Legal Persons
1. Organizations seeking to make profit as the basic purpose
of their activity (commercial organizations) or not having making
profit as such a purpose and not distributing profit received
among their participants (non-commercial organizations) may be
legal persons.
2. Legal persons that are commercial organizations may be
created in the form of business partnerships and companies.
3. Depending upon the nature of activity, cooperatives may
be organizations pursuing the extraction of profit as the basic
goal of their activity (commercial organizations) or not having
extraction of profit as such a goal (non-commercial
organizations).
4. Legal persons that are non-commercial organizations may be
created in the form of societal amalgamations, funds, unions of
legal persons, and also in other forms provided by a statute.
Non-commercial organizations may conduct entrepreneurial
activity only to the extent that this serves the attainment of the
purposes for which they are founded and corresponds to these
purposes. For the conduction of entrepreneurial activity, non-
commercial organizations have the right to create business
companies or to participate in them.
Article 52. Legal Capacity of a Legal Person
1. A legal person may have civil law rights corresponding to
the purposes of activity provided in its founding document and
bear the duties connected with this activity.
Commercial organizations may have civil law rights and bear
civil law duties necessary for conducting any types of activity
not forbidden by a statute.
A legal person may engage in certain types of activity, a
list of which is determined by a statute, only on the basis of
special permission (or a license).
2. A legal person may be limited in rights only in cases and
by the procedure provided by a statute. A decision on limitation
of rights may be protested by the legal person to a court.
3. The legal capacity of a legal person shall arise at the
time of its creation (Paragraph 3 of Article 56) and shall
terminate at the time of completion of its liquidation (Paragraph
7 of Article 69).
The right of a legal person to conduct activity, to engage in
which it is necessary to obtain special permission (or a license),
shall arise from the time of receipt of such a license or at the
time indicated in it and shall terminate on the expiration of the
term of its effectiveness, unless otherwise established by a
statute or other legal acts.
Article 53. Creation of a Legal Person
The founders of a legal person shall conclude a contract in
which they determine the procedure for joint activity for the
creation of the legal person, the conditions of transfer to it of
their property and the conditions of their participation in its
activity.
The charter of the legal person being created shall be
drafted on the basis of the contract by the founders.
Article 54. Liability of the Founders of the Legal Person
The founders of the legal person bear joint and several
liability for obligations connected with the foundation of the
legal person that arose before the state registration of the legal
person.
Article 55. Founding Document of a Legal Person
1. The founding document of a legal person in the charter
approved by its founders.
A legal person created in accordance with the present Code by
a single founder shall act on the basis of a charter approved by
this founder.
2. The charter of a legal person must indicate the name of
the legal person, its seat, and the procedure for managing the
activity of the legal person and also must contain the other
information required by a statute for legal persons of the
respective type.
In the charter of a non-commercial organization the subject
and purposes of its activity shall be established.
In the charter of a commercial organization, the subject and
purposes of its activity may be established. The charter of
noncommercial organizations and unitary enterprises and, in cases
provided by a statute, also of other commercial organizations,
must define the object and purposes of the activity of the legal
person. The object and defined purposes of the activity of a
commercial organization may be provided by the charter also in
cases when this is not obligatory by a statute.
3. Changes in the charter shall take legal effect for third
persons from the time of their state registration and, in cases
established by a statute, from the time of notifying the agency
conducting state registration of such changes. However, legal
persons and their founders (or participants) do not have the right
to cite the absence of the registration of such changes in
relations with third parties who have acted taking these changes
into account.
Article 56. State Registration of Legal Persons
1. A legal person is subject to state registration by the
procedure established by statute. The data of state registration,
including the firm name of commercial organizations, shall be
included in a state register of legal persons open for public
access.
2. Violation of the procedure established by a statute for
the formation of a legal person or failure of its charter to
correspond to a statute shall entail refusal of state registration
of the legal person.
Refusal of registration on grounds of the inexperience of
creating the legal person is not permitted.
A refusal of state registration and also avoidance of such
registration may be protested to a court.
2. A legal person shall be considered created from the time
of its state registration.
Article 57. Bodies of a Legal Person
1. A legal person obtains civil law rights and undertakes
civil law duties through its bodies acting in accordance with a
statute, other legal acts, and the charter.
The procedure for appointing or electing bodies of a legal
person shall be determined by a statute and the charter.
2. In cases provided by a statute a legal person may obtain
civil law rights and undertake civil law duties through its
participants.
3. A person who, by virtue of a statute or the charter of a
legal person, acts in its name must act in the interests of the
legal person represented by him in good faith and reasonably. This
person shall be obligated on demand of the founders (or
participants) in the legal person, unless otherwise provided by a
statute or contract, to compensate for the damages caused by him
to the legal person.
Article 58. The Name of a Legal Person
1. A legal person shall have its own name, containing an
indication of its organizational-legal form. The names of a non-
commercial organizations must contain an indication of the nature
of the activity of the legal person.
2. A legal person that is a commercial organization must have
a firm name.
A legal person whose firm name has been registered by the
procedure established by statute has the exclusive right to its
use.
The procedure for registration and use of firm names shall be
determined by a statute and other legal acts in accordance.
3. Obtaining rights and duties under the firm name of
another legal person is not permitted.
A person who has unlawfully used another's registered firm
name, on demand of the holder of the right to the firm name, shall
be obligated to stop its use and compensate for the damages
caused.
Article 59. Seat of a Legal Person
The seat of a legal person is the place of location of its
permanently acting body.
Article 60. Liability of a Legal Person
1. A legal person shall be liable for their obligations with
all property belonging to them.
2. The founder of (or a participant in) a legal person shall
not be liable for the obligations of the legal person, and the
legal person shall not be liable for the obligations of the
founder (or participant), with the exception of cases provided by
the present Code or by the charter of the legal person.
Article 61. Representative Offices and Branches
1. A representative office is a separate subdivision of a
legal person located outside the place where the legal person is
located which represents the interests of the legal person and
conducts their protection.
2. A branch is a separate subdivision of a legal person
located outside the place where the legal person is located and
conducting all its functions or part of them, including the
function of representation.
3. Representative offices and branches are not legal persons,
and they act on the basis of regulations approved by the legal
person.
The heads of representative offices and branches are
appointed by the legal person and act on the basis of a power of
attorney from it.
Representative offices and branches must be indicated in the
charter of the legal person that has created them.
Article 62. Institution
1. An institution is an organization created as a legal
person for the conduct of administrative, cultural and societal,
or other functions of a non-commercial character and financed by
it in whole or in part.
2. An institution is not a legal person and acts on the
basis of a statute approved by a legal person.
3. An institution with respect to the property attached to
it exercises the rights of possession, use, and disposition of its
property within the limits established by statute, in accordance
with the purposes of its activity, with from the legal person, and
the designated purpose of the property
4. Liability for the obligations of an institution shall be
borne by the legal person that founded the institution.
5. The peculiarities of the legal status of individual types
of state and other institutions is determined by statute and other
legal acts.
Article 63. Reorganization of a Legal Person
1. Reorganization of a legal person (merger, accession,
division, spin-off, transformation) may be conducted by decision
of its founders (or participants) or by the body of the legal
person so authorized by the charter.
2. In cases established by a statute, reorganization of a
legal person in the form of a division of it or a spin-off from it
of one or several legal persons shall be done by decision of a
court.
The court shall designate an outside manager for the legal
person and delegate to him the conduct of the reorganization of
this legal person. From the time of designation of an outside
manager, the powers for managing the affairs of the legal person
shall pass to him. The outside manager shall act in the name of
the legal person in court, compile the division balance sheet and
submit it for consideration by the court together with the charter
of the legal persons arising as the result of the reorganization.
Approval by the court of these documents shall be the basis for
state registration of the newly arising legal persons.
3. A legal person shall be considered reorganized, with the
exception of the case of reorganization in the form of accession,
from the time of state registration of the newly arising legal
persons.
In case of reorganization of a legal person in the form of
accession of another legal person to it, the first of them shall
be considered reorganized from the time of making in the single
state register of legal persons of an entry on the termination of
activity of the joining legal person.
Article 64. Legal Succession Upon the Reorganization of
Legal Persons
1. In case of the merger of legal persons, the rights and
duties of each of them shall pass to the newly arising legal
person in accordance with the transfer document.
2. In case of accession of a legal person to another legal
person, the rights and duties of the acceding legal person shall
move to the latter in accordance with the transfer document.
3. In case of division of a legal person, its rights and
duties shall pass to the newly formed legal persons in accordance
with the division balance sheet.
4. In case of the spin-off from a legal person of one or
several legal persons, the rights and duties of the reorganized
legal person shall pass to each of them in accordance with the
division balance sheet.
5. In case of transformation of a legal person of one type
into a legal person of another type (a change of organizational-
legal form), the rights and duties of the reorganized legal person
shall pass to the newly arising legal person in accordance with
the transfer document.
Article 65. The Transfer Document and the Division Balance
Sheet
1. The transfer document and the division balance sheet must
contain provisions on legal succession for all obligations of the
reorganized legal person with respect to all its creditors and
debtors, including also obligations contested by the parties.
2. The transfer document and the division balance sheet must
be approved by the founders of (or participants in) the legal
person or by the body of the legal person empowered thereto by the
charter that has taken the decision to reorganize the legal person
and must be presented together with the charter for state
registration of the newly arising legal persons or for entering
changes in the charters of existing legal persons.
Failure to present the corresponding transfer document or
division balance together with the charter, and also the absence
in them of provisions on legal succession to the obligations of
the reorganized legal person shall entail a refusal of state
registration for the newly arising legal person.
Article 66. Guaranties of Rights of Creditors of a Legal
Person Upon Its Reorganization
1. The founders of (or participants in) the legal person or
the body of the legal person thereto authorized by the charter
that has adopted a decision to reorganize the legal person, and in
the cases provided by Paragraph 2 of Article 63 of the present
Code, the outside manager, are obligated to notify the creditors
of the reorganized legal person of this in writing.
2. A creditor of the reorganized legal person shall have the
right to demand termination or early performance of legal
obligations for which the reorganized legal person is a debtor and
compensation for damages.
3. If the division balance sheet does not provide the
possibility of determining the legal successor of the reorganized
legal person, the newly arisen legal persons bear joint and
several liability for the obligations of the reorganized legal
person to its creditors.
Article 67. Liquidation of a Legal Person
1. Liquidation of a legal person shall entail its termination
without transfer of rights and duties by way of legal succession
to other persons.
2. A legal person may be liquidated:
1) by a decision of its founders (or participants) or of the
body of the legal person empowered thereto by the charter,
including in connection with the expiration of the term for which
the legal person was created, with the achievement of the purpose
for which it was created;
2) in case of recognition by a court that the registration of
a legal person is invalid in connection with violations of a
statute or other legal acts committed at its founding;
3) by a decision of a court in case of conduct of activity
without appropriate permission (or license) or of activity
prohibited by a statute, or with other multiple or gross
violations of a statute or other legal acts, or in case of
systematic conduct by a societal organization or fund of activity
contradicting its charter purposes, and also in other cases
provided by the present Code.
3. A demand for the liquidation of a legal person on the
bases indicated in Paragraph 2 of the present Article may be
presented in court by a state agency or an agency of local self-
government to whom the right for presenting such a demand has been
granted by a statute.
A decision of a court for the liquidation of a legal person
may impose obligations for the conduct of the liquidation of the
legal person on its founders (or participants) or the body
authorized for the liquidation of the legal person by its charter.
4. A legal person also may be liquidated in accordance as the
result of bankruptcy.
5. If the value of the property of such a liquidated legal
person is insufficient for satisfaction of the claims of
creditors, it may be liquidated only as through bankruptcy.
Article 68. Duties of a Person Who has Taken a Decision to
Liquidate a Legal Person
1. The founders of (or participants in) a legal person or the
body of a legal person authorized thereto by the charter that has
taken a decision to liquidate a legal person are obligated to
immediately report about this in writing to the agency that
conducts state registration of legal persons, which shall enter in
the state register of legal persons information to the effect that
the legal person is in the process of liquidation.
2. The founders of (or participants in) the legal person or
the body of a legal person authorized thereto by the charter that
has taken the decision to liquidate the legal person shall appoint
a liquidation commission (or liquidator) and shall establish, in
accordance with the present Code, the procedure and periods for
liquidation.
3. From the time of appointment of a liquidation commission,
the powers for the management of the affairs of the legal person
shall pass to it. The liquidation commission may appear in court
in the name of the legal person being liquidated.
Article 69. The Procedure for Liquidation of a Legal Person
1. The liquidation commission shall place, in the press media
in which data on state registration of a legal person are
published, a publication about its liquidation and about the
procedure and period for the submission of claims by its
creditors. This period may not be less than two months after the
time of publication about the liquidation.
The liquidation commission shall take measures for the
discovery of creditors and for the receipt of debtor indebtedness
and also shall inform creditors about the liquidation of the legal
person.
2. After the end of the period for the presentation of claims
by creditors, the liquidation commission shall compile an
intermediate liquidation balance sheet, which shall contain
information on the composition of the property of the legal person
undergoing liquidation, on a list of the claims presented by
creditors, and also about the results of their consideration.
The intermediate liquidation balance sheet shall be confirmed
by the founders of (or participants in) the legal person or by the
body of the legal person authorized thereto by the charter that
made the decision to liquidate the legal person.
3. If the monetary assets available to the legal person being
liquidated are insufficient for the satisfaction of the claims of
creditors, the liquidation commission shall conduct the sale of
the property of the legal person at a public auction by the
procedure established by the statute on public auctions.
4. Payment of monetary sums to creditors of the legal person
being liquidated shall be made by the liquidation commission in
the order of priority established by Article 70 of the present
Code, in accordance with the intermediate liquidation balance
sheet, beginning from the day of its approval.
5. After settlement of accounts with creditors, the
liquidation commission shall compile a liquidation balance sheet,
which shall be approved by the founders of (or participants in)
the legal person or by the body of the legal person authorized
thereto by the charter that took the decision for the liquidation
of the legal person. The liquidation commission shall, in an
appropriate manner, send the approved liquidation balance to the
agency conducting state registration of legal persons.
6. Property of the legal person remaining after the
satisfaction of the claims of creditors shall be transferred to
its founders (or participants), unless otherwise provided by a
statute, other legal acts or the charter of the legal person.
7. The liquidation of the legal person shall be considered
complete and the legal person shall be considered to have ceased
its existence from the time of the entry of a notation to this
effect in the single state register of legal persons.
Article 70. Satisfaction of the Claims of Creditors
1. In the liquidation of a legal person, the claims of its
creditors shall be satisfied in the following order:
in the first priority, claims of creditors secured by pledge
of property of the legal person being liquidated shall be
satisfied;
in the second priority, claims of citizens to whom the
entrepreneur is liable for causing of harm to life or health shall
be satisfied by capitalization of the respective periodic
payments;
in the third priority, settlements shall be made for the
payment of severance allowances and payment for labor with persons
working under a labor agreement and also for payment of
compensation under publishing contracts;
in the fourth priority, indebtedness for obligatory payments
to the fisc shall be covered;
in the fifth priority, accounts shall be settled shall be
made with other creditors.
The claims of each priority shall be satisfied after the full
satisfaction of the claims of the previous priority.
2. In case of refusal by the liquidation commission to
satisfy the claims of a creditor or of declining to consider them,
the creditor shall have the right, before the approval of the
liquidation balance sheet, to bring a suit in court against the
liquidation commission.
3. Claims of creditors presented after the period
established by the liquidation commission for their presentation
shall be satisfied from the property of the legal person
undergoing liquidation that remains after the satisfaction of the
claims of creditors presented on time.
4. Claims of creditors of the legal person undergoing
liquidation that were not recognized by the liquidation commission
and also claims for which the creditor has been refused
satisfaction by a decision of a court shall be considered
canceled.
Article 71. Bankruptcy
1. A legal person by decision of a court may be declared
bankrupt if it is not in a position to satisfy the claims of
creditors.
The grounds and procedure for a declaration by a court of a
legal person bankrupt shall be established by the Civil Procedure
Code of the Republic of
§ 2. Commercial Organizations
1. General Provisions on Business Partnerships and Companies
Article 72. Basic Provisions on Business Partnerships and
Companies
1. Business partnerships and companies are commercial
organizations with charter (or investment) capital broken down
into the shares of the founders (or participants). Property
created at the expense of the contributions of the founders (or
participants) and also that produced or obtained by the business
partnership or company in the process of its activity shall belong
to it by right of ownership.
In cases provided by the present Code, a business company may
be created by one person.
2. Business partnerships may be created in the form of a
general partnership or a limited partnership.
3. Business companies may be created in the form of a company
with limited or supplementary liability or a joint-stock company.
4. Only individual entrepreneurs and/or commercial
organizations may be participants in general partnerships and the
general partners in limited partnerships.
Citizens and legal persons may be participants in business
companies and investors in limited partnerships.
State agencies and agencies of local self-government do not
have the right to be participants in business partnerships and
companies.
5. Business partnerships and companies may be founders of (or
participants in) other business partnerships and companies with
the exception of cases provided by the present Code and other
statutes.
6. An investment in the property of a business partnership or
company may be money, securities, commercial paper, other property
or other rights having a monetary evaluation.
The monetary evaluation of the investment of a participant in
a business company shall be made by agreement among the founders
of (or participants in) the company and shall be subject to
independent expert review (or audit).
Article 73. Rights and Duties of Participants in a Business
Partnership or Company
1. Participants in a business partnership or company shall
have the right:
1) to participate in the administration of the affairs of the
partnership or company with the exception of the cases provided by
Paragraph 2 of Article 92 of the present Code and the statute on
joint-stock companies;
2) to receive information on the activity of the partnership
or company and to be acquainted with its books and other
documentation by the procedure established by the charter;
3) to take part in the distribution of profit;
4) to receive, in case of liquidation of the partnership or
company, the part of the property left after settlements with
creditors, or its value.
Participants in a partnership or company may also have other
rights provided by the present Code, statutes on business
companies, or the charter of the partnership or company.
2. Participants in a business partnership or company are
obligated:
1) to make their investments by the procedure, in the
amounts, by the means, and within the periods that are provided by
the charter;
2) not to divulge confidential information about the activity
of the partnership or company.
Participants in a business partnership or company may also
bear other obligations provided by its charter.
Article 74. Transformation of Business Partnerships and
Companies
1. Business partnerships and companies may be transformed
into business partnerships and companies of another type by
decision of the general meeting of members by the procedure
established by the present Code.
2. In case of the transformation of a partnership into a
company, each general partner that has become a participant (or
stockholder) of the company shall bear for two years subsidiary
liability with all his property for obligations that have passed
to the company from the partnership. The alienation by the former
partner of the shares (or stock) belonging to him shall not free
him from such liability.
Article 75. Subsidiary Business Company
1. A business company is a subsidiary business company if
another (or principal) business company or partnership by virtue
of dominant participation in its charter capital or in accordance
with a contract concluded between them has the possibility of
determining decisions taken by such a company.
2. A subsidiary company is not liablefor the debts of the
principal company (or partnership).
3. A principal company (or partnership) that has the right
to give the subsidiary company instructions obligatory for it
shall answer jointly with the subsidiary company for transactions
concluded by the latter in the fulfillment of such instructions.
A principal company or partnership shall be considered to
have the right to give a subsidiary company instructions
obligatory for it only in the case when this right is provided in
a contract with the subsidiary company.
4. The participants (or shareholders) of a subsidiary
company shall have the right to compensation by the principal
partnership or company for damages caused by its fault to the
subsidiary company. Damages shall be considered caused by the
fault of the principal partnership or company only in the case
when they have occurred as the result of the execution by the
subsidiary company of instructions obligatory for it of the
principal partnership or company.
5. In case of bankruptcy of the subsidiary company due to
the fault of the principal company partnership or company, the
latter shall bear subsidiary liability for its debts. Bankruptcy
of the subsidiary company shall be considered as having occurred
due to the faulty of the principal partnership or company only in
the case when it has occurred as the result of performance by the
subsidiary company of instructions obligatory for it of the
principal partnership or company.
Article 76. Dependent Business Company
1. A business company is dependent if another (the dominant
or participant) company has more than twenty percent of the
charter capital of a limited liability company or more than twenty
percent of the voting shares of stock of a joint-stock company
2. A business company that has obtained more than twenty
percent of the charter capital of a limited liability company or
more than twenty percent of the voting shares of stock of a joint-
stock company is obligated to immediately publish information on
this by the procedure provided by the statutes on business
companies.
2. Full Partnership
Article 77. Basic Provisions on a Full Partnership
1. A full partnership is one whose participants (general
partners), in accordance with the charter are engaged in
entrepreneurial activity in the name of the partnership and bear
liability for its obligations with the property belonging to them.
2. A person may be a participant in only one full
partnership.
3. The firm name of a full partnership must contain the names
(or designations) of all its participants and the words “full
partnership” or the name (or designation) of one or more
participants with the addition of the words “and partners” and the
words “full partnership.”
Article 78. The Charter of a Full Partnership
The charter of a full partnership must contain, in addition
to the information indicated in Paragraph 2 of Article 55 of the
present Code, terms on the amount and composition of the
contributed capital of the partnership; on the amount of and
procedure for change in the shares of each of the participants in
the contributed capital; on the composition of and procedure for
making their contributions, and on the liability of the
participants for violating duties to make contributions.
Article 79. Management in a Full Partnership
1. Management of the activity of a full partnership shall be
conducted by the general agreement of all the participants. The
charter of the full partnership may provide cases when a decision
may be taken by a majority of votes of the participants.
2. Each participant in a full partnership shall have one
vote, unless the charter provides a different procedure for
determining the number of votes of its participants.
3. Each participant in a partnership, regardless of whether
he is authorized to conduct the affairs of the partnership, shall
have the right to be acquainted with all documentation for the
conduct of affairs. A waiver of this right or a limitation of it,
including by agreement of the participants in the partnership,
shall be void.
Article 80. Conduct of the Affairs of a Full Partnership
1. Each participant in a full partnership has the right to
act in the name of the partnership unless the charter establishes
that all its participants conduct affairs jointly or the conduct
of affairs is delegated to individual participants.
In the joint conduct of the affairs of a partnership by its
participants, the consent of all the participants in the
partnership is required for the making of each transaction.
If the conduct of the affairs of a partnership has been
delegated by its participants to one or more of them, then the
remaining participants, to conduct affairs in the name of the
partnership, must have a power of attorney from the participant
(or participants) to whom the conduct of the affairs of the
partnership is assigned.
In relations with third persons the partnership does not have
the right to rely upon provisions of the charter limiting the
authority of participants in the partnership with the exception of
cases when the partnership shows that the third person at the time
of making a transaction knew or obviously should have known of the
absence for a participant in the partnership of the right to act
in the name of the partnership.
2. Authorizations for the conduct of the affairs of a
partnership granted to one or several participants may be
terminated by a court on demand of one or several of the other
participants in the partnership in case of serious grounds
therefore, in particular as the consequence of a gross violation
by the authorized person (or persons) of his obligations or of his
revealed inability for the sensible management of affairs. On the
basis of the judicial decision, the appropriate changes shall be
made in the charter of the partnership.
Article 81. Duties of a Participant in a Full Partnership
1. A participant in a full partnership is obligated to
participate in its activity in accordance with the terms of the
charter.
2. A participant in a full partnership is obligated to
contribute his contributions to the contributed capital of the
partnership before its registration.
3. A participant in a full partnership does not have the
right, without the consent of the remaining participants, to
conduct in his own name in his own interests or in the interests
of third persons transactions of the same type as those that
constitute the subject of activity of the partnership.
In case of violation of this rule the partnership shall have
the right at its choice to demand from such a participant
compensation for the losses caused to the partnership or to
transfer to the partnership of all benefits obtained from such
transactions.
Article 82. Distribution of the Profit and Losses of a Full
Partnership
1. The profit and losses of a full partnership shall be
distributed among its participants in proportion to their shares
in the contributed capital unless otherwise provided by the
charter or by other agreement of the parties. An agreement for the
elimination of a participant in the partnership from participation
in the profit or in the losses is void.
2. If, as the result of losses incurred by the partnership,
the value of its net assets becomes less than the amount of its
contributed capital, profit received by the partnership shall not
be distributed among the participants until the value of the net
assets exceeds the amount of its contributed capital.
Article 83. Liability of the Participants in a Full
Partnership for Its Obligations
1. The participants in a full partnership jointly and
severally bear subsidiary liability with their property for the
obligations of the partnership.
2. A participant in a full partnership who is not a founder
shall bear liability equally with other participants for
obligations that arose before his entry into the partnership.
A partner who has left a partnership shall be liable for
obligations of the partnership that arose up to the time he left
equally with the remaining participants for two years from the day
of approval of the report on the activity of the partnership for
the year in which he left the partnership.
3. An agreement of participants in a partnership for the
limitation or elimination of the liability provided in the present
Article is void.
Article 84. Change in the Membership of the Participants in
a Full Partnership
1. In cases of the exit or death of one of the participants
in a full partnership; of the declaration of one of them as
missing, without dispositive capacity or with limited dispositive
capacity, or insolvent (or bankrupt); of the commencement with
respect to one of the participants of reorganization procedures by
decision of a court; of the liquidation of a legal person
participating in the partnership; or of the levying by a creditor
of one of the participants of execution on part of the property
constituting his share in the contributed capital, the partnership
may continue its activity if this is provided by the charter of
the partnership or by agreement of the remaining participants.
2. The participants in a full partnership have the right to
demand by judicial procedure the exclusion of any of the
participants from the partnership by unanimous decision of the
remaining participants and in case of the existence of serious
grounds therefore, in particular as the result of gross violation
by this participant of his obligations or of his revealed
inability for sensible management of affairs.
Article 85. Exit of a Participant from a Full Partnership
1. A participant in a full partnership has the right to exit
from it, by stating his refusal to participate in the partnership.
A refusal to participate in a full partnership must be stated
by the participant not less than six months before actual exit
from the partnership.
2. An agreement among participants in the partnership to
refuse the right to exit from the partnership is void.
Article 86. Consequences of Exit of a Participant from a
Full Partnership
1. A participant who has exited from a full partnership shall
be paid the value of the part of the property of the partnership
corresponding to the share of this participant in the contributed
capital, unless otherwise provided by the charter. By agreement of
the exiting participant with the remaining participants, payment
of the value of the property may be replaced by turning over
property in kind.
The part of the property due the exiting participant or its
value shall be determined according to the balance sheet compiled,
with the exception of the situation provided in Article 88 of the
present Code, at the time of his exit.
2. In case of the death of a participant in a full
partnership, his heir may enter the full partnership only with the
consent of the other participants, unless otherwise provided by
the charter of the partnership.
A legal person that is the legal successor of a reorganized
legal person that participated in a full partnership shall have
the right to enter the partnership with the consent of its other
participants unless otherwise provided by the charter of the
partnership.
Settlement with an heir (or legal successor) who has not
entered the partnership shall be made in accordance with Paragraph
1 of the present Article. The heir (or legal successor) of the
participant in a full partnership shall bear liability for the
obligations of the partnership to third persons for which in
accordance with Paragraph 2 of Article 83 of the present Code a
participant who exited would have been liable, within the limits
of the property of the exited member of the partnership that
passed to him.
3. If one of the participants has exited from the
partnership, the shares of the remaining participants in the
contributed capital of the partnership shall be correspondingly
increased unless otherwise provided by the charter or by other
agreement of the participants.
Article 87. Transfer of the Share of a Participant in the
Contributed Capital of a Full Partnership
A participant in a full partnership has the right, with the
consent of its remaining participants, to transfer his share in
the contributed capital or part of it to another participant in
the partnership or to a third person.
In case of transfer of a share (or part of a share) to
another person, the rights belonging to the participant who
transferred the share (or part of a share) pass to it in full or
in corresponding part. The person to whom a share (or part of a
share) passes shall bear liability for the obligations of the
partnership by the procedure established by subparagraph 1 of
Paragraph 2 of Article 83 of the present Code.
The transfer of a whole share to another person by a
participant in the partnership terminates the participant's
participation in the partnership and entails the consequences
provided by Paragraph 2 of Article 83 of the present Code.
Article 88. Levy of Execution on a Participant's Share in
the Contributed Capital of a Full Partnership
Levy of execution on a participant's share in the property of
a full partnership for its debts not connected with participation
in the partnership (personal debts) shall be permitted only in
case of insufficiency of his other property to cover the debts.
Creditors of such a participant have the right to demand of the
full partnership the separation of a part of the property of the
partnership proportional to the share of the debtor in the
contributed capital with the purpose of levying execution on this
property. The part of the property of the partnership or its value
subject to separation shall be determined according to a balance
sheet compiled at the time of presentation by creditors of demands
for separation.
The levying of execution on property corresponding to the
share of a participant in the contributed capital of a full
partnership shall terminate his participation in the partnership
and shall entail the consequences provided by subparagraph 2 of
Paragraph 2 of Article 83 of the present Code.
Article 89. Liquidation of a Full Partnership
A full partnership may be liquidated on the bases indicated
in Article 67 of the present Code and also in the situation when a
single participant remains in the partnership. Such a participant
shall have the right for six months from the time when he became
the sole participant in the partnership to transform such a
partnership into a business company by the procedure established
by the present Code.
A full partnership shall also be liquidated in the cases
indicated in Paragraph 1 of Article 84 of the present Code if the
charter of the partnership or an agreement of the remaining
participants does not provide that the partnership shall continue
its activity.
3. Limited Partnership
Article 90. Basic Provisions on Limited Partnership
1. A limited partnership is a partnership in which, along
with participants conducting entrepreneurial activity in the name
of the partnership and answering for the obligations of the
partnership with their property (general partners), there are one
or more investor-participants (limited partners), who bear the
risk of losses connected with the activity of the partnership
within the limits of the amounts of investments contributed by
them and do not take part in the conduct by the partnership of
entrepreneurial activity.
2. The status of general partners participating in a limited
partnership and their liability for the obligations of the
partnership shall be determined by the rules of the present Code
on participants in a full partnership.
3. A person may be a general partner only in one limited
partnership.
A participant in a full partnership may not be a general
partner in a limited partnership.
A general partner in a limited partnership may not be a
participant in a full partnership.
4. The firm name of a limited partnership must contain either
the names (or designations) of all the general partners and the
words “limited partnership” or “special partnership,” or the name
(or designation) of not less than one general partner with the
addition of the words “and partners” and the words “limited
partnership.”
If the name of an investor is included in the firm name of a
limited partnership, this investor shall become a general partner.
5. The rules of the present Code on a full partnership shall
be applied to a limited partnership to the extent that this does
not contradict the rules of the present Code on the limited
partnership.
Article 91. The Charter of a Limited Partnership
The charter of a limited partnership must contain, in
addition to the information indicated in Paragraph 2 of Article 55
of the present Code, terms on the size and composition of the
contributed capital of the partnership; on the size of and
procedure for change of the shares of each of the general partners
in the contributed capital; on the composition of and procedure
for their contributing their investments; on their liability for
the violation of obligations for the contribution of investments;
and on the total size of investments contributed by the investors.
Article 92. Management of a Limited Partnership and Conduct
of Its Affairs
1. Management in a limited partnership shall be conducted by
the general partners. The procedure for managing and conducting
the affairs of such a partnership by its general partners is
established by them in accordance with the rules of the present
Code on a full partnership.
2. Limited partners do not have the right to participate in
the management and conduct of affairs of a limited partnership nor
to act in its name without a power of attorney. They do not have
the right to contest the actions of general partners in the
management and conduct of the affairs of the partnership.
Article 93. Rights and Duties of an Investor in a Limited
Partnership
1. An investor in a limited partnership has the obligation to
contribute its investment in the contributed capital. The
contribution of the investment shall be certified by a certificate
of participation issued to the investor by the partnership.
2. An investor in a limited partnership has the right:
1) to receive the part of profit of the partnership due for
its share in the contributed capital by the procedure provided by
the charter;
2) to be acquainted with the annual report and balance sheets
of the partnership;
3) at the end of the fiscal year to leave the partnership and
receive its investment by the procedure provided by the charter;
4) to transfer its share in the contributed capital or part
of it to another investor or a third person. The investors shall
enjoy a priority right before third persons for the purchase of a
share (or parts of it) by analogy with the conditions and
procedure provided by Paragraph 2 of Article 101 of the present
Code. The transfer by an investor of the whole share to another
person shall end his participation in the partnership.
The charter of a limited partnership may also provide other
rights of an investor.
Article 94. Liquidation of a Limited Partnership
1. A limited partnership shall be liquidated upon the exit of
all investors participating in it. However, the general partners
shall have the right instead of liquidation to turn the limited
partnership into a full partnership.
A limited partnership shall also be liquidated on the bases
for liquidation of a full partnership (Article 89). However, a
limited partnership shall be maintained if at least one general
partner and one investor remains in it.
2. Upon liquidation of a limited partnership, including in
case of bankruptcy, the investors shall have a priority right
ahead of the general partners to receipt of their investments from
the property of the partnership remaining after satisfaction of
the claims of its creditors.
The property of the partnership remaining after this shall be
distributed among the general partners in proportion to their
shares in the contributed capital of the partnership unless
another procedure is established by the charter or by agreement of
the general partners.
4. Limited Liability Company
Article 95. Basic Provisions on the Limited Liability
Company
1. A limited liability company is a company founded by one or
several persons, the charter capital of which is divided into
shares of amounts determined by the charter. The participants in
a limited liability company are not liable for its obligations;
they bear the risk of losses connected with the activity of the
company within the limits of the value of the investments
contributed by them.
2. The firm name of a limited liability company must contain
the name of the company and the words “limited liability company.”
3. The legal status of a limited liability company and also
the rights and duties of its participants shall be determined by
the present Code and the statute on limited liability companies.
Article 96. Participants in a Limited Liability Company
1. The number of participants in a limited liability company
must not exceed the limit established by the statute on limited
liability companies. Otherwise the company will be subject to
transformation into a joint-stock company within a year and, upon
expiration of this period, to liquidation by judicial procedure if
the number of its participants is not reduced to the level
established by the statute.
2. A limited liability company may not have as a sole
participant another business company consisting of one person.
Article 97. Charter of a Limited Liability Company
The charter of a limited liability company must contain, in
addition to the matters listed in Paragraph 2 of Article 55 of the
present Code, conditions on the size of the charter capital of the
company; on the size of shares of each of the participants; on the
composition of and procedure for the contribution by them of
investments; on the liability of participants for violation of the
obligation to contribute investments; on the composition and
competence of the agencies of administration of the company and
the procedure for their making decisions, including on questions
decisions on which are taken unanimously or by a qualified
majority of votes; and also on other matters provided by the
statute on limited liability companies.
Article 98. The Charter Capital of a Limited Liability
Company
1. The charter capital of a limited liability company
consists of the value of the investments of its participants.
The charter capital determines the minimum amount of the
property of the company guarantying the interests of its
creditors. The amount of charter capital cannot be less than the
amount determined by the statute on limited liability companies.
2. The founders of a limited liability company are obligated
before registration of the company to fully pay in the charter
capital.
3. It is not permitted to free a participant in a limited
liability company from liability for the obligation to contribute
an investment to the charter capital of the company. This
prohibition includes setoff of claims against the company.
4. If at the end of the second or each following financial
year the value of the net assets of a limited liability company is
less than the charter capital, the company is obligated to report
the reduction of its charter capital and to register its reduction
by the established procedure. If the value of these assets of the
society is less than the minimum amount of charter capital set by
a statute, the company is subject to liquidation.
5. A reduction of the charter capital of a limited liability
company is permitted only after notification of all of its
creditors. The latter have the right in this case to demand early
performance or termination of the respective obligations and
compensation for damages.
Article 99. Management of a Limited Liability Company
1. The highest body of a limited liability company is the
general meeting of its participants.
In a limited liability company an executive body (collegial
and/or one-individual) shall be created that conducts the current
management of its activity and reports to the general meeting of
its participants. A one-individual body of administration may also
be elected from among non-participants.
2. The competence of the bodies of management of the company
and also the procedure for their making decisions and acting in
the name of the company shall be determined in accordance with the
present Code by the statute on limited liability companies and the
charter of the company.
3. The following are in the exclusive competence of the
general meeting of participants in a limited liability company:
1) changing the charter of the company and the size of its
charter capital;
2) forming executive bodies of the company and terminating
their powers early;
3) approving annual reports and accounting balances of the
company and distributing its profits and losses;
4) deciding on the reorganization or liquidation of the
company;
5) electing the auditing commission (or the auditor) of the
company.
The statute on limited liability companies may also assign
the decision of other questions to the exclusive competence of the
general meeting.
Questions assigned by statute to the exclusive competence of
the general meeting of participants in the company may not be
transferred by them for decision by the executive body of the
company.
4. For review of the correctness of the annual financial
report of a limited liability company, the company has the right
to invite each year a professional auditor not connected by
property interests with the company or its founders (an outside
audit). Audit verification of the annual financial report of the
company may also be conducted on demand of any of its
participants.
In this case the audit review shall be made at the expense of
the participant who has demanded such a review.
The procedure for conducting audit reviews of the activity of
the company shall be determined by a statute and the charter of
the company.
5. Publication by the company of information on the results
of conducting its affairs (or a public report) is not required
with the exception of cases provided by the statute on limited
liability companies.
Article 100. Reorganization and Liquidation of a Limited
Liability Company
1. A limited liability company may be voluntarily reorganized
or liquidated by unanimous decision of its participants.
Other bases for reorganization and liquidation of the company
and also the procedure for its reorganization and liquidation are
determined by the present Code and other statutes.
2. A limited liability company has the right to transform
itself into a joint-stock company.
Article 101. Transfer of a Share in the Charter Capital of a
Limited Liability Company
1. A participant in a limited liability company has the right
to sell or otherwise alienate its share in the charter capital of
the company or part of it to one or several participants in the
given company.
2. Alienation by a participant in the company of its share
(or part of it) to third persons is permitted unless otherwise
provided by the charter of the company.
The participants in the company enjoy a priority right of
purchase of the share of a participant (or part of it) in
proportion to the amounts of their shares, unless the charter of
the company or an agreement of its participants has provided
another procedure for exercising this right. In case the
participants in the company do not use their priority right within
one month from the day of notice or within another period provided
by the charter of the company or agreement of its participants,
the share of the participant may be alienated to a third person.
3. If, in accordance with the charter of a limited liability
company, alienation of the share of a participant (or part of it)
to third persons is impossible and the other participants in the
company refuse to buy it, then the company is obligated to obtain
the share of the participant.
4. In case a participant's share (or part of it) has been
obtained by the limited liability company itself, the company is
obligated to sell it to the other participants or third persons
within the periods and by the procedure that are provided by the
statute on limited liability companies and the charter of the
company or to reduce its charter capital in accordance with
Paragraphs 4 and 5 of Article 98 of the present Code.
5. Shares in the charter capital of a limited liability
company pass to the heirs of citizens and to the legal successors
of legal persons that are participants in the company, unless the
charter documents of the company provide that such transfer is
permitted only with the consent of the remaining members of the
company. A refusal of consent to the transfer of the share shall
entail the obligation of the company to pay the heirs (or legal
successors) of the participants its actual value or to give them
property in kind of such value by the procedure and on the
conditions provided by the statute on limited liability companies
and the charter of the company.
Article 102. Levy of Execution on the Share of a Participant
in the Property of a Limited Liability Company
1. Levy of execution on the share of a participant in the
property of a limited liability company for its personal debts is
permitted only in case of insufficiency for this participant of
other property to cover its debts. The creditors of such a
participant have the right to demand from the limited liability
company payment of the value of the part of the company
corresponding to the share of the debtor in the charter capital or
the separation of this property for the purpose of levying
execution on it. The part of the property of the company subject
to separation or its value shall be determined according to a
balance sheet made at the time of presentation of claims by
creditors.
2. Levying execution on the whole share of a participant in
the property of a limited liability company shall terminate his
participation in the company.
Article 103. Exit of a Participant in a Limited Liability
Company from the Company
A participant in a limited liability company has the right at
any time to exit from the company regardless of the consent of its
other participants.
Article 104. Settlements Upon Exit of a Participant from a
Limited Liability Company
1. A participant who has exited a limited liability company
shall be paid the value of the part of the property corresponding
to its share in the charter capital unless otherwise provided by
the charter of the company.
By agreement of the exiting participant with the company,
payment of the value of the property may be replace by issuance of
property in kind.
The part of the property of the company due to the exiting
participant or its value shall be determined according to a
balance sheet compiled at the time of its departure.
2. If the right of use of property was contributed as a
contribution to the charter capital of a limited liability
company, the respective property shall be returned to the
participant exiting from the company. Reduction in value of such
property as the result of its normal wear shall not be
compensated.
3. Settlements with an heir or legal successor of a
participant that has not entered the company shall be made in
accordance with the rules of the present Article.
5. Company With Supplementary Liability
Article 105. Basic Provisions on Companies With
Supplementary Liability
1. A company with supplementary liability is a company
founded by one or several persons whose charter capital is divided
into shares of sizes determined by the charter. The participants
in such a company jointly and severally bear subsidiary liability
for its obligations with their property in a multiple of the value
of their contributions, which multiple is identical for all of
them and is determined by the charter of the company. In case of
bankruptcy of one of the participants, its liability for the
obligations of the company shall be distributed among the
remaining participants in proportion to their investments, unless
another procedure for distributing liability is provided by the
charter of the company.
2. The firm name of a company with supplementary liability
must contain the name of the company and the words “company with
supplementary liability.”
3. The rules of a the present Code on the limited liability
company shall be applied to a company with supplementary
liability, unless the present Article does not provide otherwise.
6. Joint-Stock Company
Article 106. Basic Provisions on Joint-Stock Companies
1. A joint-stock company is a company whose charter capital
is divided into defined number of shares of stock.
2. Only joint stock companies have the right to issue shares
of stock.
3. The participants in a joint-stock company (the
stockholders) are not liable for its obligations and bear the risk
of losses connected with the activity of the company within the
limits of the value of the shares of stock belonging to them.
4. A joint-stock company may be founded by one person or may
consist of one person in case of obtaining by one person of all
the shares of stock of the company. Information on this should be
contained in the charter of the company, be registered, and be
published for general notice.
A joint-stock company may not have as a sole participant
another business company consisting of one person.
5. The firm name of a joint-stock company must contain its
name and also the words “open joint-stock company” or “closed
joint-stock company.”
6. The legal status of a joint-stock company and the rights
and duties of the stockholders shall be determined in accordance
with the present Code and the statute on joint-stock companies.
7. The peculiarities of creation of joint-stock companies by
the privatization of state enterprises are determined by statutes
and other legal acts on the privatization of these enterprises.
Article 107. Open Joint-Stock Companies
1. A joint-stock company whose participants can alienate the
shares of stock belonging to them without the consent of the other
stockholders is an open joint-stock company. Such a joint-stock
company has the right to conduct open subscription to shares of
stock issued by it and to their free sale on the conditions
established by a statute and other legal acts.
2. An open joint-stock company must each year publish for
general information an annual report and a balance sheet.
Article 108. Closed Joint Stock Company
1. A joint-stock company whose shares of stock are
distributed only among its founders or other previously determined
group of persons is a closed joint-stock company. Such a company
does not have the right to conduct an open subscription to shares
of stock issued by it nor otherwise to propose them for
acquisition to an unlimited group of persons.
2. The number of participants in a closed joint-stock
company must not exceed the number established by the statute on
joint-stock companies; otherwise the company will be subject to
transformation into an open joint-stock company within a year, and
on the expiration of this period, to liquidation by judicial
procedure, if their number is not reduced to the limit established
by the statute.
3. In cases provided by the statute on joint-stock
companies, a closed joint-stock company may be obligated to
publish for general information the documents indicated in Article
107 of the Present Code.
Article 109. Transfer of Shares of a Closed Joint-Stock
Company
1. Shareholders of a closed joint stock company have a
preferential right to obtain stock, soled by other shareholders of
this company.
If none of these shareholders uses his preferential right in
the period provided by the charter of the company, the joint stock
company has the right to itself obtain these shares at a price
agreed with their owner. In case the joint-stock company refuses
to obtain the shares or there is a failure to achieve an agreement
on their price, the shares may be sold to any third party.
2. case of pledge of the shares of a closed joint stock
company and the subsequent levy of execution on them, the rules of
Paragraph 1 of the present Article are applied to the pledgee.
3. Shares of a closed joint-stock company pass to the heirs
of a citizen or the legal successor of a legal person that was a
shareholder unless the charter of the company provides otherwise.
In case of refusal of the company to consent to transfer of
shares to heirs of a citizen or two the legal successor of a legal
person that was a shareholder, the rules of Paragraph 1 of the
present Article are applied.
Article 110. Charter of a Joint-Stock Company
The charter of a joint-stock company, in addition to the
matters indicated in Part 2 of Article 55 of the present Code,
must contain conditions on the categories of shares of stock
issued by the company, their par value and number; on the size of
the charter capital of the company; on the rights of stockholders;
on the composition and competence of the bodies of management of
the company and on the procedure for their making decisions,
including on questions, decisions on which are taken unanimously
or by a qualified majority of votes. The charter of a joint-stock
company also must contain other matters provided by the statute on
joint-stock companies.
Article 111. Charter Capital of a Joint Stock Company
1. The charter capital of a joint-stock company consists of
the par value of the shares of stock of the company obtained by
the shareholders.
2. The charter capital of the company determines the minimal
size of the property of the company guarantying the interests of
its creditors. It may not be less than the size provided by the
statute on joint-stock companies.
3. The founders of a joint-stock company are obligated
before registration of the company to fully pay in the charter
capital. At the founding of a joint stock company all its shares
of stock must be distributed among the founders.
4. It is not permitted to free a shareholder from the
obligation to pay for shares of a company including by way of
setoff of claims against the company.
5. If upon the ending of the second and each subsequent
fiscal year, the value of the free assets of the company is less
than the charter capital, the company is obligated to declare and
register by the established procedure a reduction of its charter
capital. If the value of these assets becomes less than the
minimum amount of charter capital determined by statute (Paragraph
1 of the present Article), the company is subject to liquidation.
6. A statute or the charter of the company may establish
limitations on the number, the total par value of shares or the
maximum number of votes that one shareholder can have.
Article 112. Increase in the Charter Capital of a Joint-
Stock Company
1. A joint-stock company has the right, by decision of the
general meeting of stockholders, to increase the charter capital
by increasing the par value of shares of stock or by issuing
additional shares of stock.
2. In cases provided by the statute on joint-stock companies,
the charter of a company may establish a preferential right of
stockholders possessing simple (or common) or other voting shares
of stock to purchase additional shares of stock issued by the
company.
Article 113. Reduction of the Charter Capital of a Joint-
Stock Company
1. A joint-stock company has the right