Commercial Code (English).pdf commericial code of ethiopia

commericial code

1. COMMERCIAL CODE 259
TABLE OF CONTENTS
CommercialCode
TABLEOFCONTENTS
BOOKI.TRADERSANDBUSINESSES
TITLEI.GENERAL PROVISIONSAPPLICABLE TOTRADERS
Chapter1.Provisionsapplyingtopersonscarryingonatrade
Chapter2.Traders
Chapter3.Personscapableofcarryingonatrade..
Chapter4.Carryingonatradebymarriedpersons..
Chapter5.Righttoactasatrader..
Page
1
1
3
4
5
TITLEII.AUXILIARIESANDAGENTS
Chapter1.CommercialEmployees..
Chapter2.Managers
Chapter3.Commercialtravellersand
Chap,ter4.Commercialagents
Chapter5.Commercialbrokers....
Ohapter6.Commissianagents
representatives
6
7
8
9
12
13
TITLEIII.ACCOUNTS
-
Chapter1.Keepingofaccountscompulsory
Chapter2.Booksandaccountstobekept..
Chap.ter3.BooksandaccountsadmissibleeviJenee..
Chapter4.Keepingofaccounts....
13
13
14
14
TITLEIV.THECOMMERCIAL REGISTER
Chapter1.OrganisatianoftheCommercialRepter
Chapter2.EntriesintheCommercialRegister....
Section1.Generalprovisions..
Section2.Registration
Section3.Alterationofentriesandadditionalentries..
Section4.Cancellationofentries
Chapter3.Sanctians
Section1.Penalprovisions
17
18
18
19
22
23
23
23

2. 260 COMMERCIAL CODE
TABLE' CONTENTSOF
Section2.Civilsanctions
Chapter4.Finalprovisions
TITLEV.BUSINESSES
Chapter1.GeneralProvisions
Ohapter2.Elementsofabusiness..
Section1.Constituentelementsofahusiness..
Section2.Goodwillandun,£airoommeroiaJcompetition..
Section3.Trade-names
.
Section4.Distinguishingmarks
Section5.Righttotheleaseofthepremises
Section6.Patentsandliteraryorartisticoopyright....
.,.1...
'.
.
Chapter3.Sale~fabusiness
Section1.GeneralprovisioJ1o..
Secmon2.Formalities
Section3.Duti"softhe:;eller..-
Seetion4.Dutiesofthehuyer..
Section5.Publicationofthesaleandrightsoftheseller's
creditors
Chapter4.Mortgageofabusiness..
Section1.Generalprovisions..
Section2.Mortgageott1hei>enerandaCtionforthecancellation
ofthecontractofsale
Section3.C,'ltractualmortgage
Section4.1enerofregisteringmprtgages
""
Section5.
;:,
.;htsofsecuredcrreditors
Chapter5.Hireofabusiness
Chapter6.Contributionofa.businessto
-
abusinessorganisation
BOOKII.BUSINESSORGANISATIONS
TITLE1.GENERALPROVISIONS
TITLEII.ORDINARYPARTNERSHIP
Chapter1.
Chapter2.
Chapter3.
Chapter4.
Generalprovisions
Contribntions
Managementofthepartnership..
Rightsanddutiesofpartners....
Page
23
25
25
26
26
26
27
28
28
29
30
30
30
31
32
32
34
34
34
35
36
37
39
41
45
45
46
47

3. COMMEIICIAL CODE 261
TABLE 0FCONTENTS
Ohapter5.Relationsofthepartnershipwith,thirdparts
Chapter6.Dissolutionandwinding-upofpartnership
Page
49
50
TITLEIII.JOINTVENTURE
TITLEIV.GENERALPARTNERSHIP
TITLEV.LIMITEDPARTNERSHIP
TITLEVI.COMPANIES LIMITEDBYSHARES
53
55
58
Chapter1.Generalprovisions
Chapter2.Formationofthecompany
Chapter3.Sharesandtherightsanddutiesofshareholders..
Chapter4.Directors,autlitnrsandshareholdersmeetings....
Sedion1.Management
Section2.Auditors
Section3.Shareholders'meetings
Paragraph1.Generalprovisions..
Paragraph2.Ordinarymeetings..
Paragraph3.Extraordinarymeetings
Paragraph4.Specialmeetings....
Chapter5.Debentures
Chapter6.Accountsofcompanies..
Chapter7.Amendmentstothememorandumorarticlesofassociation
Chapter8.Dissolutionandwinding-up....
59
61
66
72
72
79
83
83
89
90
91
91
96
100
107
TITLEVII.PRIVATELIMITEDCOMPANIES
C,hapter1.Formationandgeneralprovisions
Chapter2.Shares
Chapter3.Organisationofthecompany....
Chapter4.Accounts
Chapter5.Dissolution
111
113
114
117
117
TITLEVIII
CONVERSIONANDAMALGAMATION
TITLEIX
BUSINESSORGANISATIONSINCORPORATEDABROAD
OROPERATINGABROAD 121

4. 262 COMMERCIAL CODE
TABLE CONTENTSOF
BOOKm.CARRIAGEANDINSURANCE
TITLEI.CARRIAGEBYLAND
Chapter1.GeneralProvisions
Chapter2.Transporttitles
Section1.Passenger'sticket..
Section2.Luggageticket
Section3.Transporttitlesinrespectofgoods..
Chapter3.Rightsanddutiesofpartiestoarontractofcarrioge....
Section1.Rightsanddutiesofsenderandaddressee....
Section2.Dutiesofcarrierofgoodsorregisteredbaggage
Section3.Dutiesofpartiestoacontractofcarriageofpersons
Chapter4.Liabilityofthecarrier..
Chapter5.Legalproceedings
TITLEII.CARRIAGEBYAm
Chapter1.Generalprovisions
Chapter2.Transporttitles..
Section1.Passenger'sticket
Seotion2.Luggage-ticket
Section3.Billoflading
Chapter3.Rightsanddutiesofsenderandaddressee
Chapter4.Liabilityofthecarrier..
Chapter5.Provisionsapplicabletocertainformsoftransport
TITLEIII.INSURANCE
Chapter1.Generalprovisions
Chapter2.Provisionsapplicabletoallformsofinsurance....
Section1.Insurancepolicy....
Section2.Rightsanddutiesoftheparties....
Section3.Limi,tation..
Chapter3.Insuranceagainstdamages
Section1.Insuranceofobjects
Section2.Insuranceofliabilityfordamages....
Chapter4.Insuranceofpersons....
section1.Generalprovisions..
Section2.Lifeinsurance
Page
122
123
123
123
123
125
125
126
127
127
129
130
130
130
130
131
133
135
139
140
140
140
142
144
145
145
146
147
147
147

5. COMMERCIAL CODE
TABLE OfCONTENTS
263
Page
151
TITLEIV.GAMESANDGAMBLING
BOOKIV
NEGOTIABLE INSTRUMENTS ANDBANKINGTRANSACTIONS
TITLEI.GENERALPROVISIONS
TITLEII.COMMERCIAL INSTRUMENTS
Chapter1.Generalprovisions
Chapter2.Billofexchanse
Section1.Establiahmentandformofbillsofexchange
Section2.Negoutionofbillsofexchange....
Section3.Acceptance
Section4.Acceptanceforhonour
Section5.Maturity..
Section6.Payment .
Section7.Recoursefornon-acceptanceornon.payment..
Section8.Interventionforhonour....
Section9.Partsofasetandcopies....
Section10.Alterations
Section11.Limttationofactions
Section12.GenenUprovisions
Chapter3.Promissorynotes
Chapter4.Cheques
Section1.Drawingandformofacheqhe'....
Section2.Negotiation
Seotion3.Acceptanceforhonour(Aval)
Seotion4.Presentmentandpal)'D1ent..
SeoIiion5.Crossedd1equesandcheques
.
payableinaccoun.t....
Section6.Recoursefornon-payment..
Section7.Partsofaset
.
Section8.Altera.tions
Section9.Limitationofactions
Section10.Generalprovisions
Chapter5.Traveller.cheques
Chapter6.Publicityofprotest....
156
156
156
158
161
163
164
165
167
174
177
178
178
179
179
181
181
184.
186
186
188
189
192
193
193
194
195
195

6. 261
COMMERCIAL CODE
TABLE CONTENTSOF
TITLEm.BANKINGTRANSACTIONS
.,
;
Chapter1.Bankdeposits..
Section1.Deposit.of.fundS....
Section2.~ traailers....
Section3.'DepoBit'ofsecurities;
Chapter2.Hiringofsafes
Chapter3.Contractsforcurrentaccounts..
Section1.Definition,oonditionsanddurationofcurrentaccounts
Section2.Effects.ofcurrentaccounts.. ....
Section3.Effectsofbankruptcyofremitterwherecommercial
instrwnentsarediscountedandentered.incurrent
...
account.... ....
CIaapter4.Discount
Chapter5..Credittransactions
Section1.Opencrediis
.
Section2.Advanceonsecurities
Section3.Pledgeofsecurities
Section4.Documentarycredits
BOOKV.BANKRUPTCY ANDSCHEMESOF
ARRANGEMENT
TITLEI.GENERALPROVISIONS
TITLEII..)JANKRPETCY,
Ohapter1.Judgmentinbankruptcy
Chapter2.Personsresponsibleforconduci~ngbankru,ptcypro-
ceedinss
SeclIion1.Thecourt..
Section2.Commissionerinbankruptcy
SecIiion3.Trustees
Section4.Creditor'scommittee
Chapter3.Provi&ionaland.conservatorymeasures..
Section1.Conservatorymeasures .....
""
..
SecIIion2.Seals
Section3.Inventory...
'.
....
'.
Page
196
196
197
199
200
201
'201
203
204
205
206
206
207
207
208
211
215
215
215
216
218
219
~19
220
221

7. t
1- COMMERCIAL CODE
TABLE CONTENTS
265
OF
Chapter4.Effectofadjudicationinbankruptcy....
Section1.Effectasregardsthedebtor
Section2.Managementofdebtor'sproperty....
Chapter5.Provingfordebts
Section1.Procedureforproving
Section2.Partiesjointlyandseverallyliableandguarantors
Section3.Rightsofcreditorssecuredbyaguaranteeonmovables
otherthanbusinesses
Section4.Rightsofmortageesandcreditorssecuredbyim-
movables
Section5.Rightsofcreditorssecuredbyamortgageonthe
business....
Section6.Recovery
Chapter6.Settlementofthebankruptcy....
Section1.Composition
Section2.Compulsorywinding-up....
Chapter7.Bankruptcyproceedingsclosed..
Page
222
222
225
226
226
229
230
231
232
233
235
235
240
242
TITLEIII.SCHEMESOFARRANGEMENT 243
TITLEIV.SPECIALRULESCONCERNING BANKRUPTCY
ANDSCHEMESOFARRANGEMENT WITHRESPECT
TOBUSINESSORGANISATIONS
TITLEV.SUMMARY PROCEDURE
BOOKVI.TRANSITORYPROVISIONS
Chapter1.Generalprovisions
Chapter2.Traders.Businesses.Businessorganisations
Chapter3.Negotiableinstrumentsandbankingtransactions
Chapter4.Bankruptcy....
-~~
",/~
255
256
257
257

8. ~~n.nll
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AddisAbaba5thMay1960
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GazetteExtraordinary
nh~"''I'Clif~/ll1nl'toIJ".fClJllJf"-+V-*1'''IP~"P'+-''''p'+
""1~ih"lII
COMMERCIAL CODEOFTHEEMPIREOFETlUOPIA
PROCLAMATION No.166OF1960
't,
J

9. Thefir~teditionofthisbookwaspublishedduringthe30thyearof
reign
ofHisImperialMajestyHaileSelassieI,Emperorof
Ethiopia.
BerhanenaSelamPdntingPressofH.I.M.HaileSelassieI-17-9-52-No.2071-52-
5000
n

10. PROCLAMA TIONNo.166of1960
THECOMMERCIAL CODEPROCLAMATION OF1960
CONQUERINGLIONOFTHETRIBEOFJUDAH
HAILESELASSIEI
ELECTOFGOD,EMPEROROFETHIOPIA
WHEREAS theprogressofOu,rEmpireinthefieldofcommercerequires
thecodlificationofOurcommerciallaws;and
WHEREAS aCommercialCodehasbeenpreparedunderOursupervisioll
andhasreceivedtheapprovalofOurSena'teandChamberofDeputies;
NOW,THEREFORE, inaccordancewithArticles34and88ofOu,rRevis-
edConstitution,Weapprovethe,resolutionsofOurSenateandChaIT.berof
DeputiesandWc'herebyproclaimasfollows:
1.ThisProclamationmaybedtedasthe"CommercialCodeProclamation,
1960."
2.TheCommercialCodeof1960,aspublishedinaseparatevolumeap-
p.caringasExtraordinaryIssueNo.3of1960oftheNegaritGazeta,shallcome
intoforceonthe11thdayofSeptember,1960.
3.TheBankruptcyLawandtheCompanylawof12thJuly,1933,are
herehyrepealedasfronvt,he11thdayofSeptember,1960.
DoneatAddisAbabathis5thdayofMay,1960.
TSAHAFETAEZAZAKLILUHABTEWOLD
DeputyPrimeMinisterandMinisterofPen
III
"
.
.
/'

11. PREFACE
CONQUERING UONOFTIlETRIBEOFJUDAH
HAILESELASSIEI
ELECTOFGOD,EMPEROROFETIDOPIA
Inthemodemworld,nonati6ncanhopetoexpandiACO.JReJ'Cialand
e~onomiclifeunlessthereexistsafirmlegalbasiswhichwillcasaurethe
neceaaryelemenf$ofstabilityandsecurityinbusinesstranlaCti6,.,wIUUat
tMNmeRaeprovidingasufficientlyarticulatedyetflexibleframeworkwithin
whichtnuleandcommercemayflouris.handgrow.Today,inEthWpiD,the
developaentofcommercehasoutgrowntheprovisio,.,ofthielawsreltJttingto
b~. organi.8ati6nsandbankruptcywhichwerepromulgatedduringthefirst
y.,..
01OurReignandwhichwereo.:laptedtothecommerceandindustryof
those_lyday..ThecommerciallifeofEthWpiahasexpanded,increosing
_mber.0/.EthWpiDnandforeigncompa.havebeenforJMdandregistered,
ahdmOTecomple%methodsoftransactingbusinesshavebeendet>elopedinreo
emir-'""
Recognisinstheimpetuswhid&.amodernCod.eregulatingtheconstituti6n
tm,dtlCtifJrieiofallbusinessorganiaationscouldgivetothefurtMrp-owth
01mulecn4commerce,WedirectedtheCodific6ti6nCommissi6ncreatedbyUS
toprepare"moderftCommercialCodewhichwouldserveforthepresentday
IJ8vellasprot1ideasolidfoundati6nforthefurtherrefinementoflawscreatingof
thesesubjectB.WeMvedirectedthatintheexpami6nandconsolidati6nof
Our'commercial,laws.greatattentionshouldbegiventotMcontrolofalltrad.
'v J
/

12. ing,andinpUl.ticulartothecontrolofthecarriageof
pcusengersandgoods,an
aspectofcommercialactivitywhichhasincreasedgreatlyinthelastdecade.
Similarly,inviewofthefurtherexpansionofbothforeignandinternalcom-
merce,ithasbeennecessarytoelaboratelawsgoverningnegotiableinstruments
andbankingtransactions.
TheCommercialCodewhichistodaybeingpromulgatedfulfilsthese
requirements.ItisgroundedinEthiopia'sancientlawsandcustomsandhas
beenfurtherextendedbyreferencetothelawsofothergreatcommercialpowers.
WeareconfidentthatthisCodewillfulfiltheaspirationsofOurBelovedPeople
andwillassistintheswiftandorderlydevelopmentofEthiopia'seC01wmiclife.
OurParliamenthasstudiedwithcareandpatiencethedetailedprovisionsof
thisCodeandwhathasbeenapprovedbyitiswellsuitedtotheneedsofOur
OwnCountryandtothosepersonsandenterprisesfromotherlandswhoare
participatingandsharinginthebenefitsofthecommerciallifeofOurEmpire.
Weareevermindfulthatintheall-importanttaskofthecodificationofOurlaws
TVehavebeeng,uidedbyAlmightyGod,andthatthefruitsofthisworkwill
underlinetheprincipleofinternationaljusticewithoutwhichnonationcan
surviveorprosper.
Giveninthe30thyearofOurReign,this5thdayofMay,1960
HAILESELASSIEI
Emperor
VII
/

13. BOOKI.TRADERSANDBUSINESSES
TITLEI.GENERAL PROVISIONSAPPLICABLE TOTRADERS
Chapter1.ProvisionsApplyingtoPersons
CarryingonaTrade
Art.!.
-
ScopeofapplicationoftheCivilCode.
UnlessotherwiseprovidedinthisCode,thepro"isioueoftheGivilCode
shallapplytothestatusandactivitiesofpt11"SOD8andbusinessorgaWsations
carry.i.ngonatrade.
Art.2.
-
Scopeofapplicati{)noftheMaritimeCode.
TherelevantprovisionsoftheMariltIimeCodeshallapp~ytopersonsand
businessorganisationscarryingonmaritimetrade.
Art.3.-Personsandbusinessorganisations.
Theprovisionsof1ihiisCodeapplicabletopersonsothert.haInthoseprovisions
applIicabletophysicalpersonsonlyshl8illappIJytobuakeesorganisations.
Nothingshallaffectthespecialprov,isionsofBookIIandBookVTitleIV
ofthisCodeapp1icahletobusinessorganisaltionsonly.
Art.4.-BodiescorporateunderPublicLaw.
(1)Unlessothel"\"isee~y WOvidedbylaw,bodies00l'p0I'6teunder
publiclaw,suchasadminish1!lUveorreligiousilnstitUJtionsor811yother
publicundertakings,shallnotbedeemedtobemuJersevenwherethey
carryonacl1iiVIitiesunderArt.5.
(2)1lheprov,isioueofsub-art.(1)shallmotapplytoundertakdngsin
whichbodiesoorpol'llteunderpubliclawonlypamcipate.
Chapter2.Traders
Art.5.,-Personstoberegardedas,traders.
Personswhoprofessionallyandforgaimcarryon8IIlYoftiIrefollowing
acl1iv,ities!!ballbedeemed,tobetmders:
(1)PurchaseofmovablesorimmovableswithaviewItare.sellingthem
eitherastheyareoraEteraIt_tion
~
adaptaJW:m;
(2)Purchaseofmovableswithaviewtolettingthemforhire;
(3)Wa,rehousingactivi:1IiesasdefinedinArt.2806of1!b.eGivilCode:
(4)Exploi,tationofmines,includingprospectingforandworkingof
mineraloils;
5)Exploitationofquarriesnatbyhan~smen;
/

14. 2 COMMERCIAL CODE
(6)Exploitationofswtpans;
(7)Conversionandadaptaitionofcih~!Jtels,suchasfoodstuffs,rawmaterials
orsemi.linishedproductsnothyhandicraftsmen;
(8)Building,repairing,maintaining,cleaning,paintingordyeingmov-
ablesnothyhandicraftsmen;
(9)Emhankiiing,levelling,trenchingordminingcarriedoutforathird
pal'tynotbyhandiC1'a£tsmen;
(10)Carriage.ofgoodsorpersons110tbyhandicra£tsmen;
(11)Printingandengravingandworksconnectedwithphotographyor
cinematographynothyhandicra:fu:smen;
(12)Capturing,distributingand.supplyingwater;
(13)Producing,distributingandsupplyingeloot;ticity,gas,compressedair
inclu~heatingandcooling;
(14)Operatingp"mcesofentertainmentorradioortelevisionstartJions;
(15)Operatingihotels,restaurants,bars,cafes,inns,hairdressingestablish-
menrtsnotoperatedhyhandicraftsmenandpublicharths;
'(16)Publishingam.w1hmeverform,andinparticularhymeansofprinrtJing,
engreving,photographyorrecording;
(17)Operatingnewsandinformationservices;
(18)Opemtingtravelandp.ublicitJyagencies;
(19)Operatinghusinessasanagent,broker,stockbrokerorcommercial
~;
(20rOperatingabankii.ngandmoneychangingbusiness;
(2~'
Operallinganinswwtcebusiness.
Art.6.-AgriClJ.lturalorForestryundertakings.
(1)Personswlrocarryonactivitiesrelatingtoagri,culture,forestry,breed-
~
catdeormaintainingpastureland,shallnothedeemedtohetraders
'WIheretheyselltheprodudsofthelandtheyexploitoruse,oranim:lls
or,~productsofanimalsbredmainlyfromtheresoureesoftheInnd
1W1bich11Msaidpersonsexploitoruse.
(2)SuchpenJQJlSshallnothedeemedtohetraderswhethertheeXploitation
is!individualorcollective,suchasanagriculturalcommunityora
cooperativeunder1iakJing.
\3)NurserymenWIhosellplantswhichgrowonthelandtheyexploitoruse
.
shiallJJetbedeemedtohetraders.
Art.7.
-
AgriculturalProductsHowDealtwith.
(I)Persons(whocarryonactirvitiesunderAl't.6(1)shallnothedeemed
tohe,traderswheretheydealwiththeirwOOuctsinaccordancewith

15. 2 COMMERCIAL CODE
(6)ExploitationofsMtpans;
(7)Conversionandadaptaitionofchattels,suchasfoodstuffs,rawmaterials
orsemi.1inishedproductsnothyhandicradJtsmen;
(8)Building,repairing,maintaining,cleaning,paintingordyeingmov-
ablesnothyhandicraftsmen;
(9)Emhankiiing,levelling,trenchingordrainingcarriedoutforathird
pal"tynothyhandiCl'a£tsmen;
(10)Carriage.ofgoodsorpersonsnotbyhandicraftsmen;
(11)Printingandengravingandworksconnectedwithphotographyor
cinemato~raphynothyJmndicra:£tsmen;
(12)CaptW'ing,distributingand.supplyingwater;
(13)Producing,distributingandsupplyingeloot;ticity,gas,compressedair
inclu~heatingandcooling;
(14)OperatingJilitCC8ofentertainmentorradioortelevisionstatlions;
(15)Operatingihotels,restaurants,bars,cafes,inns,hairdressingestablish.
mentisnotoperatedhyhandicraftsmenandpublicbaths;
'(16)Publishingdinw1hateverform,andinparticularhymeansofprinting,
engmving,photographyorrecording;
(17)Operatingnewsandinformationservices;
(18)Opemtingtravelandp.uhlicirtyagencies;
(19)Operatingbusinessasanagent,broker,stockbrokerorcommercial
~;
(20tOperatingaha.nIcingandmoneychanginghusiness;
(2~'
Operallingani.nsumncebusiness.
Art.6.-AgriClJ.lturalorForestryundertakings.
(1)Personswhocarryonactivitiesrelatingtoagri,culture,forestry,breed-
~
catlt'leormaintainingpastureland,shallnotbedeemedtobetraders
'WIheretheyselltheproductsofthelandtheyexploitoruse,oranimals
or,1Jhieproductsofanimalsbredmainlyfromtheresourcesofthel~nd
1W1hich1!1resaidpersonsexploitoruse.
(2)Suchpersonsshallnotbedeemedtobetraderswhethertheexploitation
is<individualorcollective,suchasanagriculturalcommunityora
coopera:tiveundertaking.
\3)N~n WIhosellplantswhichgrowonthelandtheyexploitoruse
sbJalIJJethedeemed1JObetraders.
Art.7.-AgriculturalProductsHowDealtwith.
(1)Persons,whocarryonacti¥itiesunderArt.6(1)shallnotbedeemed
tobe'traderswheretheydealwiththeirwoductsin<lccordancewith

16. COMMERCIAL CODE 3
theusuallHacticeoftheirbusiness,solongassuchdealingrelatesonly
toproductsofthelandwhichtheyexploitoruse,ortoanimalsor
productsofanimalsbredmainlyfromtheresourcesofthelandwhich
theyexploitoruse.
(2)Suchpersonsshallnotbedeemedtobetraderswhethertheundertak-
ingisindividualorcollecbivesuchasanagriculturalcommunityor
acooperativeundertaking.
Art.8.
-
Fishermenandpersonsbreedingfish,shell.fis.horshells.
Fishermenandpersonswhobreedfishorshell-fishorshellsshallnotbe
deemedtobetraderswheretheyselltheproductsoftheirfishingorbreed.
ing.
Art.9.
-
Handicraftsmen.
(1)TheprovisionsofthisCoderelatingtotradersshallnotapplytohandi-
craftsmen.
(2)Handicraftsmenarepersonswhocarryonan,independentactivity,who
livemainlyontheirownmanualwork,whomaycarryontheiractivity
;withtheassistanceofmembersoftheirfamilyandofnotmorethan
threeemployeesorapprenticesandwhobuysuchmaterialonlyasis
necessaryfor(Jarryi~gouttheiractivi1JiI'..5,withoutsettingupstocks.
(3)HandicraftsmenmlllYusemechanicalpower.
(4)Handicra£tsmenaresubjecttotheprovisionofanyspeciallawrelating
totheiractivities.
AN.10.
-
BusinessOrganisations.
(1)Businessorganisationsshallbedeemedtobeofacommercialnature
wheretheirobjectsunderthememorandum ofassociationorinfact
a,retocarryonanyoftheactivitiesspecifiedinArt.SofthisCode.
(2)Sharecompainesandprivatelimitedcompaniesshallalwaysbedeemed
tobeofacommercialnaturewhatevertheirobjects.
Chapter3.PersonsCapableofCarryingonaTrade
Art.11.
-
PersonsincapableundertheCivilCode.
(1)PersonsincapableundertheCivilCodemaynotcarryonanytrade.
(2)Whereincapab~epersonscarryonatrade,theyshallnot,subjectto
theprovisionsofArt.14andIS,acquirethestatusoftradersandtheir
actsmaybeinvalidatedinaccordancewitlhtherelevantprovisions
oftheCivilCode.
.

17. "
COMMERCIAL CODE
Art.12.
-Tutors.
Tutorsmaynotcarryonatradeinthenameandonbehalfofaminor
cxceptinthecasesprovidedinArt.288oftheCivilCode.Thesamepro-
visionsshallapplytothetutorofaninterdictedperson.
Art.13.
-
EmancipatedMinors.
(1)NotwithstandingtheprovisionsofArt.333oftheCivilCode.eman-
cipatedminorsmaynotcarryonatradeunlessauthorisedin-writing
bythefamilycouncil.
(2)Indefaultofau~horisationundersub-art.(1),emancipatedminors
s1Jalluothedeemedtoheofage.
Art.14.
-Effectof;1<1inoril)"inrelationtothir,'p<lrties.
NotwithstandingtheprovisionsofArt.3]8oftheCivilCode,whereaminor
whocarriesonatradehascausedhimselftoheenteredinthecommercial
rcgisterasthoughhewereofage.hisbeingaminorshallnotaffectthird
parties,inaccordancewithArt.12]ofthisCodc.
Art.15.
-
Publicationofincapociry.
Whereapersonhasbeendeclaredill('<!l~able,such
thirdpartiesunlessnoticeofsuchincapacityhas
mercia]register(Art.121).
incapacitysJIallnotaffect
heenenteredinthecom-
Chapter4.CarryingonaTradebyMarriedPersons
Art.]6.-Mari"iedpel'sonsmay carryontrade.
Anymarriedpersonmaycarryonatradeasthoughhewereunmarried
unlesshisspouseobjectstheretoasprovidedinArt.645oftheCivilCode.
Art.17.
-
Notificationofobjecti{)n.
(1)AsbetweenspousesanobjectionunderArt.16mayhenotifiedto[hI'
tradingspouseinanymanner.
(2)AnobjectionunderArt.16shallnotaff('Ctthirdparties.inaccordance
I\ithArt.12]ofthisCode,unlessnoticeofsuchobjectionhasheen
enteredinthecommercialregister.
Art.]8.~Settingasideofobjection.
(])
Wherethetradingspouseisoftheopinionthattheobjectionisnot
justified,havingregardtotheinterestofthefamily,hemayapp.lyto
thefamilyarbitratorstosotasidetheobjection.
(2)Wheretheobjectionissetasidebythearhitralors,anoticetothis
effectshallbeenteredint'hecommercialregister.

18. COMMERCIAL CoDE s
Art.19.
-
Debtscontractedbythetradingspouse.
Debtscontractedbythetradingspouseshallbedeemedtobedebt.ofthe
marriagewithinthemeaningofArt.659oftheCivilCodeandmaybe
recoveredonthepersonalestateofeachspouseandoncommonproperty.
Art.20.-Effectofobjection.
Whereanobjectionunder
register,debtscontractedby
personalestateonly.
Art.16hasbeeneI1Jteredinthecommeroial
thetradingspousemayberecoveredonhis
Art.21.-CooMrationofspouses.
Wherespousestogethercarryonatrade,theyshallbothbedeemedtobe
traders,unlessitisshownthatoneofthemistheemployeeoftheother.
Chapter5.RighttoActasaTrader
Art.22.-:-Freedomtol"J,rryontrade.
SubjecttosuchprohibitionsorlawfulrestrictioDsregardingunfaircompe.
titionasmaybeprescribed,any,personorbusine!!8organizationhasthe
righttocarryonanytradeinaccordancewiththeplVVisionsregulating
suchtrade.
Art.23.
-
Legalprohibitionsorrestrictions.
(1)Paritcularpersonsmayberestrictedorpreventedfromacting88traders
orfromcarryingonaparticulartradebylegalprovisionssettingup
prohibitionsorincompatibilities.
(2)Specificrequirementsastoage,qualifications,sex,nationalityorli.
cencemaybeimposedbylawinrespectofparticulartrades.
Art.24.-Effectofprohibitionsandrestrictions.
(1)Personswhocarryonatradesubjecttoprohibitionor:restrictionor
withouthavingtheprescribedqualificationsshallbeliabletothepe-
naltiesprovidedbylaw.
(2)Personswhocarryonatradesubjecttoprohibitionorrestrictionmay
J)ptPivokethesaidprohibitionorrestrictiontofreethenueIvesfrom
Iillbilitiesincurredincarryingonatradesubjecttoprohibitionorre-
striction.TheymaynotholdthemselvesouttobetraderstothUd
partiesbuttheyshallbeliableasthoughtheyweretraders.
Art.25.
-
Associations.
(1)Associationsmaynotcarryonanytrade.
f2)-An-yqviolation-of-theprovisions-of-sub-art.(1)shallCODItituteagrowad
fordissolutionunderArt.461oftheCivilCode.
I

19. 6 COMMIIBCIAL CODE
.Art.26.-Bruinessorsanisationscarnnsontrade.
No"1nuineeeorgiu:t.isation.shaIJ.carryonatradewlUcbitisnotpermitted
tocarTyonorWlhichissubjecttospecificrequirementswithwhichthe
IIIi4bU8ine8eorganisationbasnotcomplied.
Art.27.-BodiescorporateunderPublicLaw.
'the.~wbereatrademaybecarrie(!onbyadministrativeorreligious
iD8titntionsoranyotherpublicundertakingandtheconditionsandeffect
ofeuchtradesballbeprescribed.
1'ITLEII.AUXILIARIES ANDAGENTS
Chapter1.CommercialEmployees
Art.28.-Definition.
1)Commercialemployeesarepersonswhoareboundtoatraderbyacon-
tractofemploymentandwho8'1Sistthetraderbydoingworkofanon.
manualIlAtureasasalesm.m,secretary,accountant,guardian,inspec.
torordirector.
2)Commercial:.mployeesarenottraders.
Art.29.-CivilCodeapplicable.
WithoutprejudicetotheprovisionsofthisCode,theprovisionsoftbeCivil
Coderelatingtocontractsofemploymentsballapplytocommercial
EmpJoyees.
Art.30.-Prohibitionfromcarryinsonprivatetrade.
1)Acommercialemploycemaynotcarryon,onhisownbehalforon
behalfofathirdparty,atradesimilartothetradecarriedonbyhis
;employer.Whereanemployeeinfringe;tbisprohibition,hist!mployer
mayc1aimdamagesandmaycancelorrefusetorenew.thecontractof
.
employmentinaccordancewithArt.2591oftheCivilCode.
2)Acontractofemploymentmayonlycontainaprohibitionfromcarry-
ingonprivatetradeupontheexpiryofthecontractofemployment
ontheconditionsspecifiedinArt.2589,2590and2592oftheCivil
Code.
Art.31.-Asents.
1)
2)
Commercialemployeesmay,actasagentsbyexpressortacitagreement.
Therevocationofthepowerofagencyshallnotresultinthecancella.
tionofthecontractofemployment.

20. COMMERCIAL CODE 7
Art.32.-PowersofEmployeeinchargeofsales.
1)Theemployeeinchargeofthesalesinastoreshallbedeemed.tohave
apowerofagencyforthepurposeofsellingorreceivinggoodswhich
comewithinthenormalbusinessactivitiesofstoresofsuchnature.
2)Hemaydemandthatgoodssoldbyhimbepaidtohim,unlesspay-
mentistobemadetoaspecialaccount.
TheemployeemaynotdemandpaymM!outsidethestoreunlessso
expresslyauthorisedorunlessheproducesdTet'.A!iptsignedbythetra-
der.
3)
Chapter2.Managers
Art.33.-Definition.
1)Amanagerisapersonwhohasbeenauthori~~d,expresslyortacitly,to
carryoutactsofmanagementandtosigninthenameofthetrader.
Amanagerisnotatrader.2)
Art.34.-Publicity.
Whereamanagerhasbeenappointed,thetradershallcauseanentry
tobemadeinthecommercialregister.
Themanagershallhavepowertoactbyvirtueofhisappointment,not-
withstandingthattheprovisionsofsub-art.(1)havenotbeencom.
pliedwith.
Art.35.
-
POwe1'SofManager.
1)
2)
1)Inhisrelationswiththirdparties,themanagershallbedeemedto
havefullpowertocarryoutallactsofmanagementconnected.with
theexerciseofthetrade,includingthepowertosignanegotiablein-
strument.
Unless~presslyauthorisedtodoso,hemaynotsellorpledgeimmov-
ableproperty,normayhesell,hireorpledgeabusiness.
Art.36.-Restrictiononpowers.
2)
1)Thepowersofamanagermaybelimitedtothemanagementofa
branch.Sucharestrictionshallnotaffectthirdpartiesinaccordance
withArt.121ofthisCodeunlessnoticeofsuchrestrictionhasbeen
enteredinthecommercialregister.
Anyotherrestrictionshallnotaffectthirdparties.2)

21. 8 COMMERCIAL CODE
Chapter3.CommercialTravellersandRepresentatives
Art.37.
-
Commercialtravellers.
(1)Acommercialtravellerisaperson,domiciledattheplacewherethe
headofficeofthebusinessis!lit1.li8teandboundtoatraderbyacon-
tractofemployment,whoisentrustedbythetraderwithviaiting
clientsandofferingtothemgoodsorservicesinthenameandon
behalfofthetrader.
(2)Unlessotherwiseagreed,contractsenteredintobyacommercialtra-
vellershallbeofnoeffectunlessconfirmedbytrader.
(3)Commercialtravellersarenottraders.
Art.38.
-
Commercialrepresentatives.
(1)Acommercialrepresentativeisaperson,notdomiciledattheplace
wherethcheadofficeofthebusinessissituateandhoundtoatrader
byacontractofemployment,whoisentrustedbythetraderwith
visitingclientsinaspecifiedareaandofferingtothemgoodsorser-
vicesinthenameandonbehalfofthetrader.
(2)Unlessotherwiseagreed,contractsenteredintobyacommercialre-
presentativesshallbecomeeffectivewithoutconfirmationbythetrader.
(3)Commercialrepresentativesarenottraders.
Art.39.
-
PrivateBusiness.
(1)Unlessotherwiseprovidedinthecontractofemployment,commercial
travellersandrepresentativesmaynotcarryonprivatebusiness.
Wiheretheycarryonprivatebusiness,theyshalllosetheircompen-
sationasprovidedinArt.42and43.
(2)TheprovisionsofArt.30(2)shallapplywherecommercialtravellers
andrepresentativeshavebeenauthorisedtocarryonprivatebusiness.
Art.40.
-
Actingonbehalfofothertraders.
(1)
Unlessotherwiseagreed,commercialtravellersandrepresentatives
maynotactonbehalfoftradersotherthanthetradertowhomthey
arehound.Wheretheyactonbehalfofothertraders,theyshalllose
theircompensationasprovidedinArt.42and43.
(2)Innocasemaytheyactonbehalfofatradersellinggoodsoroffer-
ingservicessimilartothegoodssoldortheservicesofferedbythe
tradertowhomtheyarebound.
Art.41.
-
Remuneration.
(1)Commercialtravellersandrepresentativesshallbepaidbysalaryor
oncommissionorboth.
(2)Theremunerationshallbefixedbythecontractofemploymentor,
wherenotfixed,bycustom.

22. COMMERCIAL CODE
Art.42.
-
Compensationincaseofterminationofcontract.
Wherethetraderterminatesthecontractwithoutgoodcause,l..'Ommercial
travellersandrepresentativeswhoareboundbyacontractenteredinto
foranundefinedperiodoftimeshallbeentitledtofaircompensationfix-
edinaccordancewithArt.2583oftheCivilCode.
Art.43.
-
Compensationonaccountofclientsintroduced.
Whereacontractenteredintoforanundefinedpel1iodoftimeistermina-
tedbythetraderorwhereacontractenteredintoforaspecifiedperiodof
timeisnotrenewedbythetrader,nofaultbeingattributabletothecom-
mercialtravellerorrepresentative,thecommercialtravellerorrepresen-
tativeshallbeentitledtocompensationequal-totheprofitderivedfrom
thecustomersintroducedorgoodwillcreatedorextendedbyhim.
~..
Chapter4.CommercialAgents
Art.44.-
Definition.
(1)Acommercialagentisapersonorbusinessorganisation,notbound
toatraderbyacontractofemploymentandcarryingoutindependent
activities,whoisentrustedbyatraderwithrepresentinghimperma-
nentlyinaspecifiedareaanddealingormakingagreementsinthe
nameandonbehalfofthetrader.
..
(2)Unlessotherwiseprovidedintheagencyagreemeht,contractsentered
intobyacommercialagentshallbecomeeffectivewithoutconfirma-
tionbythetrader.
(3)Acommercialagentnormallyactsasagentandmayactasbroker.
Heisatrader.
Art.45.
-
Commercialagentexclusiveagen~.
Unlessotherwiseprovidedintheagencyagreement,acommercialagent
shallbetheexclusiveagentoftheprincipalintheareaspecifiedinthe
agreement.
Art.46.
-
Dutiesofcommercialagent.
(1)Acommercialagentshallsafeguardtheprincipal'sinterestswiththe
careduebyagoodtrader.
(2)Heshall:
(a)carryoutallinstructionsoftheprincipal;
(b)informtheprincipalofallcontractsnegotiatedorenteredinto
byhim;
9
..
"Ii
j.

23. 10 COMMERCIAL CODE
(c)sendtotheprincipalperiodicalreportsonhisactivitiesandall
suchinformationasmayberequiredonthestateofaffairswith.
intheareawhereheacts.
.
(3)Wheretheagencyagreementcomestoanend,acommercialagent
maynot'takeadvantageofordisclosetradesecretsrevealedtohim
bytheprincipalorofwhichhelearnedinthecourseofhisduties
asan'agent.
Art.47.-Prohibitionfromcarryingonprivatetrade.
(1)Acommercialagentmaycarryonanyprivatetradewhichisnot
similartotihetradecarriedonbytheprincipal.Theagencyagree-
mentmaybecancelledanddamagesmaybeduewheretheagent
carriesontradesimilartothetradecarriedonbytheprincipal.
(2)Unlessotherwiseprovidedintheagencyagreement,acommercial
agentmaynotactin,theareaspecifiedintheagreementonbehalf
oftradersotherthantheprincipal.
(3)InnoCII8emayacommercialagentact,intheareaspecifiedinthe
agencyagreement,onbehalfoftraderswhocarryonatradesimilar
tothetradecarriedonbytheprincipal.T,heagencyagreementmay
becancelledanddamagesmaybeduewheretheagentdisregardsthis
prohibition.
.
Art.48.-Dutiesofprincipal.
Theprincipalshall,tothebestofhisability,enableh,isagenttocarry
oUtsuccessfullyhisdutiesundertheagencyagreement,inplirticularby
makingallnecessaryinformationandsamplesavailabletohim.
.
Art.49.-R~paymentofexpenses.
Unl-otherwiseagreed,currentcostsandexpensesoftheagencyshall
bebornebythecommercialagentandarenotsubjecttorepaymentby
theprincipal.Theagent'shallonlybeentitledtotherepaymentofexpen-
sesoccasionedbydealingsmadeonbehalfoftheprincipalandofsuch
specialexpensesasweremadebyhimontheorderoftheprincipal.
Art.5'0.-Remuneration.
(1)Acommercialagentshall.."Ceiveremunerationforalld~ nego-
tiatedormadebyhim.Unlessotherwiseprovided,heshallreceive
remunerationforalldealingsmade,intheareawhereheacts,either
bytheprincipaJ.himselforbyanotheragentoftheprincipal.

24. /
COMMERCIAL CODE 11
(2)Acommercialagentshallreceiveremunerationevenwheredealings
madebyhimarehotcarriedoutbytheprincipal.
(3)TheremunerationshaHbefixedintheagencyagreementor,where
notfixed,bycustom.
Art.51.-Agentpersonallytocarryouthisduties.
Acommercialagentmaynotassigntheagencyagreementandmaynot
substituteathirdpartyforhimself,asanagencyagreementismadeon
thebasisofthepersonalqualificationsoftheagent.
Art.52.-Terminationofagencyagreement.
(1)Anagencyagreementshallterminate:
(a)wheretheperiodoftimeforwhichitwasenteredintoexpIres;
(b)wheretheagent,beingaperson,dies,becomesincapableoris
declaredbankrupt;
(c)wherethebusinessorganisationactingasagentiswound-up.
(2)Eitherpartytoanagencyagreementmadeforanundefinedperiod
oftimemayterminateitonnotice.Noticeneednotbegivenwhere
thereisgoodcausefortermination.
(3)Theperiodofnoticeshallbefixedintheagencyagreementor,where
nOtfixed,bycustom.Itshallnotbelessthanonemonthduringthe
firstyearofserviceandnotlessthantwomonthsafterthefirstyear.
Art.53.-Compensationdueincaseoftermination.
Wherethe.principalterminateswithoutgoodcauseanagencyagreement
enteredintoforanundefinedperiodoftime,theagentshallreceivefair
compensationwhichshallbefixedhavingregardinparticulartothetime
forwhidhheaotedonbehalfoftheprincipalandtothecustomersintro-
ducedorgoodwillcreatedorextendedbyhim.
Art.54.
-
Uncompletedbusinessupontermination.
(1)Wheneveranagencyagreementterminates,theagentorhisheirsor
thebusinessorganisationhavingactedasagentshallreceiveremune-
rationforallcontractsnegotiatedorenteredintopriortothetermina-
tionoftheagreement.
(2)Uponterminationoftheagreement,allremunerationsandexpenses
dueshallbepaidforthwithbytheprincipal.

25. 12
COMMERCIAL CODE
Art.55.
-
Prohibi~ionfromcarryingonsimilarprivatetradeontermination
oftheagreement.
(1)Theagencyagreementmayprovidethat,uponterminationofthe
agreement,thecommercialagentshallnotcarryonthesametrade
asthcprincipaloractascommercialagentorrepresentativefora
tradercarryingonthesametradeastheprincipal.
(2)Notwithstandinganyprovisionwthecontrary,anysuchprohibition
shallnotheeffectiveformorethanfiveyears.
Chapter5.CommercialBrokers
Art.56.
-
Definition.
(1)Acommercialbrokerisapersonorbusinessorganisationwho,inde.
pendently,professionallyandforgain,bringspartiestogetherforthe
purposeoftheirenteringintoanagreementsuchasacontractofsale,
lease,insuranceorcarriage.
(2)Acommercialbrokerisatrader,regardlessofthepartieshebrings
t()getherandofthenatureandobjectofthecontractforthecomple-
tionofwhich-he_actsasanintermediary.
Art.57.-Noticetoparties.
(1)Unlesscustomaryorotherwiseagreed,acommercialbrokershall,where
thepartieshaveagreedtoenterintoacontract,informbothpartiesof
thetermsoftheproposedcontract.
(2)UnlesscustomaryorOtherwiseagreed,theproposedcontractshallnot
becomeeffectiveunlessitisconfirmedbybothparties.
Art.58.
-
Liabilityofbroker.
Acommercialbrokershallheliableforanydamagehecausestoeither
party.
Art.59.-Remuneration.
(1)Acommercialbrokershallreceiveremunerationwhenthecontractfor
thecompletionofwhichheactedasanintermediaryisenteredinto,
whethersuchcontractisperformedornot.
(2)Unlesscustomaryorotherwiseagreed,theremunerationshallbepaid
onlybythepartyhavingrequiredtheservicesofthebroker.
(3)Theremunerationshallhefixedintheagreementor,wherenotfixed,
bycustom.Thecourtmayreducetheagreedremunerationwhereit
appearsexcessiveanddisproportionatetotheservicesrenderedbythe
broker.

26. COMMERCIAL CODE 13
Chapter6.CommissionAgents
Art.60.-Definition.
(1)Acommissionagentisapersonorbusinessorganisationwho,inde-
pendently,professionallyandforgain,undertakestohuyortosellin
hisname,hutonbehalfoftheprincipal,goods,movablesoranyother
thingofasimilarnature,ortoenterinhisnamehutonbehalfofthe
principalintoacontractofcarriageofgoods.
(2)Acommissionagentisatrader.regardlessofthepartiesandofthe
natureandobjectofthecontract.
Art.61.
-
CivilCodeapplicable.
TheprovisionsofArt.2234-2252oftheCivilCodeshallapplytocontracts
ofcommission.
Art.62.
-
Stockbrokers.
(1)Stockbrokersarecommissionagents.
(2)Unlessotherwiseprovidedbylaw,theyshallbesubjecttotheprovi.
sionsrelatingtocontractsofcommission.
TITLEIII.ACCOUNTS
Chapter1.KeepingofAccountsCompulsory
Art.63.
(1)
TradersandBusinessOrganisations.
Anypersonorbusinessorganisationcarryingontradeshallkeepsuch
booksandaccountsasarerequiredinaccordancewithbusinesspractice
andregulations.havingregardtothenatureandimportanceofthe
tradecarriedon.
(2)TheprovisionsofArt.66-70ofthisCodeshallapply.
Art.64.
-
Pettytraders.
Pettytradersmaybcexemptedfromkeepingaccountsonsuchconditions
asmaybepreserilied.
Art.65.
--
Specialrulesapplicabletobusinessorganisatwns.
NothinginthisTitleshallaffectthes!:,ecialprovisionsofBookIIofthis
Codeapplicabletobusinessorganisations.
Chapter2.BooksandAccountstobekept
Art.66.
-
Entryofdealings.
(])
Everytradershallkeepajournalwhereheshallmakedailyentries
ofallhisd!'alingsregardlessofthenatureofsu('hdealingsorofthe
mannerinwhi"'ltheywcrecarriedoul.

27. 14 COMMERCIAL CODE
(2)Hemayatleastonceamonthbalancetheproceedsofsuchdealings
andshallinsuchacasepreservealldocumentsnecessaryfAx-check-
ingthesedealingsdaybyday.
Art.67.-Inventoryandbalancesheet.
(1)Whenbeginningtocarryonhistrade,everytradershallpreparean
inventoryandalnilancesheet.
(2)Atradershanalso,attheendofeachfinancialyear,prepareanin-
ventoryofhisassetsandliabilitiesandbalancehisaccountsfor.the
purposeofpreparingthefinalbalancesheetandthe."cprom.andloss
account.Thebalancesheetandtheprofitandlossaccountshall.be
enteredinspecialbooks.
Art.68.
-
Keepingofbooks.
(1)ThebooksrequiredunderArt.66and67shallbekept_inchronolo-
gicalorderwithoutanyblanksoralterations.
-
.
(2)TheyshallbegivenaserialnumberandinitialledbytheJf~
authority.Thenumbero£pagesofwhichthebooksc6i1i~tshallbe
specifiedbytheprescribedauthorityonthelastpageofeachbook..
Art.69.
-
Preservationofbooks.
Allbooksandaccountingdocumentsshanbepreservedfortenyearsfrom
thedateofthelastentryinsuchbooksorfromthedateofsuchdocuments.
Art.70.
-
Correspondence.
Originalsofallletters,messagesortelegramsreceivedandcopiesofall
letters,messagesortelegramssentshallbefiledandpreservedfortenyears.
Chapter3.BooksandAccountsAdmissibleEvidence
Art.71.
-
Evidenceinfavourofpartykeepingbooks.
Whereadisputearisesbetweentradersastotheircommeroialactivities,the
courtmay,notwithstandingtheprovisionsofArt.2016oftheCivilCode,
admitasevidenceinfavourofapartybooksandaccountswhichhavebeen
keptbysuchpartyaccordingtotheprovisionsoftheprecedingArticles.
Art.72.
-
Evidenceagainstpartykeepingbooks.
(1)Booksshallproveagainstthepartyproducingthem.
(2)Apartywhoavailshimselfofbooksmaynotconcealanypartofsuch
booksthatmaycontradicthisclaim.
Chapter4.KeepingofAccounts
Art.73.
-
ScopeofapplicationofthisChapter.
(1)TheprovisionsofthisChaptershallapplytoallcommercialbusiness
organisationsandtoallpersonscarrying011atradeonsuchconditions
asmaybeprescribed.

28. COMMERCIAL CODE
15
(2)Specialrequirementsmaybeprescribedinrespectofcertainkindsof
tradersorbusinessorganisations.Theserequirementsmaydifferac-
crodingtothenatureandimportanceofthetradecarriedon.
Art.74.-Assetsinthebalancesheet.
(1)Thebalancesheetshallshow,asassets,allthedebitbalancesand,as
liabilities,allthecreditbalances.
(2)Theassetsshallappearinthefollowingorder:
(a)Establishmentexpenses;
(b)Fixedassets;
(c)Stocks;
Cd)S1iorttermorliquidassets;
(e)Theresults(DebitbalanceoftheProfitandLossAccount).
.
Art.75.-LiabilitiesiniheBalanceSheet.
-Thellabilitiesshallappearinthefollowingorder:
(1)Thepropercapitalaccountandreserves;
(2)Profitsbroughtforwardandrenewalfunds;
(3)Provisionsandlongtermdebts;personnelpensionfunds,ifany;
(4)Shorttermdebts;
(5)Theresults(CreditbalanceoftheProfitandLossAccount).
Art.76.-Amortisations,provisions,adjustmentaccounts.
(1)Amortisationsandprovisionsfordepreciationshallappearunderthe
respectiveheadingsoftheassetsinthebalancesheet.
(2)Theadjustmentaccountsshallappearintheassetsorliabilitiessideof
thebalancesheetfollowingtheaccountstowhichtheyrelate.
Art.77.
-
Establishmentexpenses.
Establishmentexpensesareexpensesmadeontheformationoftheunder-
takingorontheundertakingacquiringitspermanentmeansofworking.
Art.78.-Fixedassets.
(1)Fixedassetsconsistofassetsusedforworking,assetsnotsoused,assets
completelyamortised,andassetsincourseofbeingamortised.
(2)Assetsusedinworkingareanyassetsacquiredormanufacturedbythe
undertakingnotforsaleorfortransformationbuttobeusedinalast-
ingmannerasinstrumentsofwork.
(3)Assetsnotusedforworking.areanyassetsacquiredormanufactured
bytheundertakingbyvirtueoftheemploymentofcapitalandnot
foruseasinstrumentsofwork.
(4)Assetscompletelyamortisedarcthosestillinusebutwhosevalueis
entirelywrittenoff.

29. 16 COMMERCIAL CODE
(5)Assetsincourseofbeingamortisedarethosewhicharestillnotwrit.
tenoffattheendofthefinancialyear.
Art.79.
-
Stocks.
Stocksaregoods,materials,supplies,semi-finishedandfinishedproducts,
worksinprogressandpackingmaterials.
Art.80.
-
Capitalandreserves.
(1)Thecapitalistheoriginalvalue
oftheundertakingbytheowner
incashorinkind.
(2)Allprofitspreservedfortheundertakingandnotformingpartofthe
capitalshallconstituteareserve.
oftheelementsputatthedisposal
orpartnersbywayofcontributions
Art.81.
-
Balancecarriedforward.
Thebalancecarriedforwardismadeupofpreviousyears'profitswhich
havenotbeendistributedortransferredtoreserves,orofpreviousyears
losseswhichhavenotbeencoveredbysubsequentprofits.
Art.82.
-
Amortisationsandprovisions.
(I)Amortisationistheaccountingmeasurementofthelosssustainedby
thefixedassetsthatnecessarilydepreciatewithtime.
(2)T,heprovisionsforrisksareintendedtoprovidefordefiniterisks,na.
melyclearpreciselosses,whichareforeseenattheendofthefinancial
year.
(3)Theprovisionsfordepreciationareintendedtoprovideforthereduc-
tioninthevalueofsomeoftheassetswhichcanreasonablybeexpect-
ed.
Art.83.
-
Adjustmentaccounts.
Theadjustmentaccountsareintendedtocorrectdebtsandamountsowing
notwritteninordinaryaccountssothatonlythoseeffectivedebtsandmo-
niesowingappearatanyparticularfinancialyear.
Art.84.-Valuation.
(1)Fixedassetsshallappearinthebalancesheetattheirvaluemorigin
oriftheyhavebeenrevaluedattheirrevaluation.
(2)Merchandise,materials,supplies,packingmaterialsinstockartthedate
ofinventoryshallbevaluedattheircostprice.
(3)Immovableassetsshallappearinthebalancesheetattheirpurchase
price.

30. COMMERCIAL CODE
17
(4)Wastes(remainsofmaterialsandrefuseproceedingfrommanufacture)
shallbevaluedattherulingpriceatthedateoftheinventoryorinthe
absenceofarulingpriceattheirprobablevalueofrealisation.
(5)Productsorworksinprogressshallappearattheircostontheday
oftheinventory.
Art.85.-Provisionsfordepreciation.
Iftherealvalneofmerchandise,materials,semi.finishedproducts,finished
productsandpackingmaterialsinstockonthedayoftheinventoryisless
thanthecostprice,thetraderorcommercialbusinessorganisationshall
constituteequivalentprovisionsfordepreciation.
TITLEIV.THECOMMERCIAL REGISTER
Chapter1.OrganisationoftheCommercialRegister
Art.86.-Localandcentralregisters.
Thecommrecialregistershallconsistof:
(1)localregisterskeptineachTaklayGuezat,and
(2)acentralregisterkeptattheMinistryofCommerceandIndustry.
Art.87.-
Officialcommercialgazette.
(1)Allprincipalorsubsidiaryentriesandallcomplementaryentries,alte.
rationsordeletionssenttothecentralregistershallbepublishedin
theofficialCommercialGazette.
(2)RegulationsmaypermitofthepublicationofeXitractsonly.
Art.88.-Publicity.
(1)Publicitythroughthecommercialregistershallbeeffected,withregard
topersons,bytheentryofdeclarationsmadebysuchpersonsbefore
theauthol1itiesresponsibleforkeepinglocalregisters.Entriesinthe
cmnmercialregistershallibJaveeffectasfromthe1W0rkingdayfollow.
ingthedaywhenrtiheentl1Ywasmade.
.
(2)TheprovisionsofBookIIofthisCodeshallapplytoentriesofdecla-
rationsmadebybusinessorganisations.
Art.89.-Keepingoflocalregisters.
LocalregistersshallbekeptineachTaklayGuezatbyapersonappointed
bytheMinistryofCommerceandIndustry.
Arl.90.-CentralRegister.
(1)ThecentralregistershallbekeptinAddisAbababyaspecialdepart-
mentoftheMinistryofCommerceandIndustrywhichshallbeknown
astheDepartmentoftheCentralCommercialRegister.

31. 18 COMMERCIAL CODE
(2)TheDepartmentshall:
(a)collectfromalllocalregistersallinformationrelatingtoany
registeredperson;
(b)ensurethattheprovisionsofthelawregardingcommercialregis-
tersarecompliedwith;
(c)ensurethatpublicationsunderArt.87areeffected;
(d)receiveandpreservesuchacts,documentsandnoticesregarding
businessorganisationsasareprovidedinBookIIofthisCode.
Art.91.-Li4biliIy.
Officialsinchargeofcommercialregistersshallbepersonallyliableforany
damagecausedbythemorbyemployeesappointedbythem.
Art.92.-Communicationofentriestothirdparties.
~
Anypersononpaymentoftheprescribedfeemayrequiretheo£ficid,~
chargeofalocalorthecentralregistertodelivertohimacopyofanyex-
tractfromtheregisteror,wherethereisnoentryforwhichheissearching,
acertificatetotheeffectthatthereisnoentry.
Art.93.-Particularsonbusinesspapers.
Allregisteredtradersshallspecifyonallpapersusedintheirbusinessthe
TaklayGuez&tinwhichtheyareregisteredandtheir~tion number.
Chapter2.EnmesintheCommercialRegister
Section1.GeneralProvisions
Art.94.-Emrie8.
EntriesinthecommercialregistershallconsistofallpriJtcipal,subsidiary
orcomplementaryregistrations,andofallalterationsand'deletions.
Art.9S.-Mannerofl1UJkingentries.
(1)Entriesshallbemadeuponawrittenstatementmadebytheperson
seekingregistration.
(2)EntriesmaybecancelledasofrightasprovidedinArt.114.
Art.96.-Formofstatement.
(1)AstatementunderArt.95.(1)shallbeinwritingandinthreecopies
signedbythepersonseekingregistrationorhisrepresentative,and
shallbehandedtotheofficialinchargeoftheiocalregister.
(2)Allnecessarydocuments,ifany,shallbeannexedtothestatement.
(3)Thestatementshallbemadewithintwomonthsfromtheoccurrence
ofthefacttoberegistered.'

32. COMMERCIAL CODE 19
Art.97.-Accuracyofstatements.
(1)Theofficialinchargeoftheregistershallverifytheaccuracyofthe
statementmadebythepersonapplyingforregistration.WhereaperIOD
appliestoberegisteredasatrader,theofficialshallucer.tain!W'he1!her
theapplicantfulfilsthelegalrequdlrementsforcarryiIDgonthetmde
inrespectofwlhdchregistrationissought.
(2)Theofficialshallcheckalldocumentaryevidencesupporting,the.tate-
mentandthecon,£ormityofthestatemen.ttosuchevidence.
(3)Theofficialmayrequiretheapplicanttoproducesuohf1U'therdocu.
mentsorinformationasmaybenecessary.
Art.98.
-
Applicationhowdealtwith.
(1)TheofficialinchargeoftheregistershallmakeaneDJtryofallstilt&-
mentswhichappelU"tobecorrectandshallreturnacopyofthestate.
menttotheapplicant.Thedateofregistrationandtheregistration
number,ifany,shallbespecifiedonsuchcopy.
(2)Twodifferenttypesofnumbersshallbeusedaccordingtowhether
registrationissoughtbyapersonorabusinessorganisation.
(3)Theofficialshallk~acop.yofthest!atementandsballfileit.
(4)ThethirdcopyshallbesenttotheDepartmentofthecentralcom.
mercialregister.
Art.99.-Disputesbetweenapplicantandofficio,l.
Anydisputearisingbetweentheapplicantan4theofficialinchargeofthe
registershallbedecidedonbytheMimsterofCommerceandIndustry.
Section2.Registration
Art.100.-Personstoberegistered.
(1)AnyEthiopianorforeign~rsonorbusinessorganisationcarryingout
commeroialactivitieswifhintheEmpireofEthiopiasballberegistered.
(2)Thep.rovisionsofsub-art.(1)shallapplyinpa,rtiCular:
(a)toanyEthiopianorforeignpersonwhoisatraderwi1tbkthe
meaningofArt.5ofthisCode;
(b)toanyEthiopianorforeignbusinessorganisationwhichisacom.
mercialbusinessorganisationwithinthemeaningofArt.10ofthis
Code;
(c)toanyforeignpublicundertakingcarryingoutcommercialactio
vitiesandtoanycommercialrepresenta1li.vesoragentsofforeign
States,publicinstitutionsorundertakings.

33. JO COMMERCIAL CODE
(3)Specialregulationsapplicabletoundertakingsundersub-art.(2),
(c)shanbeprescribed.
Art.101.-Applicationforregistrationcompulsory.
(1)Apersonshallnotberegisteredasatraderunlessanapplicationto
!!hiseffectismadebythesaidpersonorhisattorney.
(2)Theapplicationshallbemade'Withintwomonthsfromthedayon
whiohthetraderbegantocarryonhistrade.
(3)Thepowerofattorneyshallbeannexedtoanapplicationmadebyan
attorney.
Art.102.-Cancell4tionofregistrationofformertrader.
Wlbereanexistingbusinessissoldorletoutforhire,thepu,rohaseror
lesseeshallnotberegisteredforsolongastheregistrationoftheformer
traderhasnotbeencancelledintheregister.
Art.103.
-
Placeofregistrdtion.
(1)'I1heapplication.forregistrationshallbemadeatthereg1i.stryofthe
TakJayGuezatwithinwhosejurisdictionthepersonseekingregistration
carriesonhistmde.Whcretheap.plicantcarriesonseveraltrades,
,heshallmaketheapplicationattheregistryintheTaklayGuezat
withinwhosejurisdictiontheprincipalplaceofbusinessissituate.
(2)Wheretheheadofficeofthebusinessisabroad,thetradershallmake
theapplicationattheregistryintheTaklayGuezatwithinwhose
jurisdictiontheprincipalbranchoragencyissituate.
Art.104.
-
Summaryregistration.
(1)Notradershallbeprincipallyregisteredinmorethanonelocalregister
norshallhebereg1i.steredundermorethanoneregistrationnumber
inoneregister.
(2)Whereatradercarriesonatradeorisinchargeofbranchesoragen.
ciesatplcaesotherthantheplacewhereheisprincipallyregistered,
hesha1Imakeanapplicationtobesummarilyregisteredinthoseplaces
andareferenceshallbemadetotheprincipalplaceofregistration.
Arl.105.-Particurorsinrespectofprincipalregistration.
Whereatradermakesanapplicationforprincipalr~,istration,heshall
state:
(a)hisname;

34. COMMBRCIAL CODB 21
(b)hisdateandplaceofbirth;
(c)hillnationality;
(d)bisprivateaddress;
(e)WIhueheisamiawr,thedateonwhichhewasauthorisedtocarryon
tradebythefamilycouncil;
(f)where,heismaI'l'iied,theplaceanddateofthemarriageandlWhe1lher
ornotamarriagesettlementwasmadeandthedateandtheplace
whereorpersonwithwhomsuchsettlementwasdeposited,ifany;
(g)theobjectsoftihetrade;
(h)whetherhecreatedtihebusinessoracquiredorleaseditandinthe
iatt«foases,thenameoftheformertradeandallnecell8Bryinformation
regardingdier~S1irationoftheformertrader;
(i)thetrade-name;
(j)thespecialdesignationunderwhichhetrades,ifIUIIY;
(k)theaddressofthebusiness;
(I)theaddressofotherbusinesses,branchesoragencies,ifany,which
thetraderoperateseitherIIJttheplaceofregiatrationorinanyother
pJacea;
(m)thenamesofthemanagers,ifany,andwhethert!heilrpowersarelimit.
edtotihemanagementofabranch;
(n)thedateonwhichthelicenceforcarryingonthetradewasgranted,
ifany.
Art.106.-Particulm-sinrespectofsummaryregistration.
Whereatradermakesanapplicaaonforsummaryregistration,heshall
state:
(a)biaD81DJe;
(b)hisP8lionality;
(c)hieprivlateaddrees;
(d)tihetradenameofthebusiness,branchoragency;
(e)<!!beaddressofthebnsiDeIII,branchoragency;
(f)dieobjectsofthetrade;
(g)1Ihenameoftihemanagerandwhetherhispowersarelimitedtotihe
uumagementofabranch;
(<h),thedateonrwlhiclIthelicenceforcarryJ.ngonthetradewo.granted,
ifany;
(i)thereferencetotheprincipalregistration,theplacewhereitwasmade
andtheregistrationnumber.

35. 22
COMMERCIAL CODE
Art.107.-Commercialbusinessorganisations.
TherelevantprovisionsofBookIIofthisCodeshallapplytoregistration
ofcommercialbusinessorganisations.
Section3.AlterationofEntriesandAdditionalEntries
Art.loa.-Alterationofentries.
(I)Anyl'eg~redpersonshall,witlmntwomonthsfromtheoccurrence
ofafactmakingnecessaryanalterationinthepamlcularsofregis-
tration,applyfortheentry,tobealtered.
(2)Anapplicationundersub-art.(I)maybemadebyanylesallyinte-
restedperSQIl.
(3)Inparticular,thedismissalofthemanagershallbeentered.
Art.109.-Additionalentriesinrespectofpe1'lOns.
(I)Anyregisteredpersonshallapplyforthefollowingaddi1liona1entries
tobemadewherenecessa;ry:
(a)themarriageofthe,tradq,1iheplaceanddateofthemarriage
andwhetherornotamarriagesetUemenJtwasmade,thedateand
theplacewhereorthepersonwithwhomthesettlementwas
deposited,ifany;
-Tb)thedissolutionofthemarriQgeonthedecisionofthefamily
arbitratorsorhythe00IJrt;
(c)thejudgmentdeclaring.thetraderincapable;
(d)anobjec:liionoft!bespouse,ifany;
(e)thesettingasideofanobjectionunderArt.18ofthisCode;
(f)theappointmentofnewmanagers;
(g)t!beopeningofnewbranchesoragencies.WhereaDewbmnch
oragencyisopened,itsha1lbesummarilyregisteredintheregister
oftheTaklayGuezatwheresuchbranchoragencyissituate.
(2)Anapplicationundersub-art.(1)mayhemadebyanylegallyinterest.
edpel'SQIl.
Art.llO.
-AdditionalentriesinrespectofbwinessorganisGtiolU.
TherelevantprovdsionsofBookIIofthisCodeshallapplytoadditional
enl;rriesinrespectofe.QIl1JIlercialbusinessorganisations.
Art.Ill.-Judgmentsinbankruptcy.
iTherelevantprovisiol18ofBookVof1IlUsCodeshallapplytoadditional
entriesofjudgmentsrelatingtobankruptcyorschemesofan.angement.

36. COMMBRCIAL CoDE 25
Section4.CancellationofEntries
Art.112.-Cessationoftrade.
AnyregisteredpersonshallapplyforIIJheregistra1iontobecancelled<within
twomonthsfrombisceasingtocarryonhistradeorwhereheletBhis
businessoutforhire.
Art.113.-Deathoftrader.
(1)~heheirsofadeceasedtradershallapplyfortheregistrationtobe
cancelledwithintwomontlhsfromthedearth.
(2)WheretheheirscarryOIlthetradeunderjointowner9h!ip,theyshall
applyforanewregistmrtiontobeentered.
(3)Wherethejointownershipisdissolved,theentrymadeundersub-art.
(2)shallbeoancelledandtbepersontowhomthebusinessisassigned
shallapplyforanewregistrationtobeentered.
Art.114.-Entriescancelledasofright.
(1)Cancellationmaybeordered116ofrightbytheMinisterofCommerce
andIndus~inparticular/Whereheknowsthatabusinesshasceased
tooperateor.thatatradermsbeendeclaredincapabletotradeorto
carryontheregisteredtrade.
(2)TheorderofoancellationshellbenotifiedbytheMinisterofCom-
merceandlndustry!toth.etraderconcernedandto1!heofficialincharge
ofthe~istrywherethecancellationistobeentrered.
Chapter3.Sanctions
Section1.PenalProvisions
Art.115.-
Failuretoregister.
Whosoeverfailstoregisterortocauseanentrytobemadeintheregister
inaccordancewiththeprovisionsofthisCodeshallbeguittyofanoffence
andshallonconvictionbeliabletothepenaltiesprovidedinArt.428of
thePenalCode.
Art.116.-Inaccuratestatements.
Wihosoeverintentionallymakesinaccuratestatementsinrelationtoregis-
trationsha1lbeguiltyofanoffenceandshallonconVliotionbeliabletotlhe
thepenalitiesprovidedin~t.387ofthePenalCode.
Section2.CivilSanctions
Art.117.-Effectofregistration.
(1)Allregisteredpersonsorbusinessorganisationsshallbedeemedtobe
traders,unlessthecontraryisproved.

37. u COMMBRCIAL CODE
(2)Registeredpersonsqrbusinessorganisaliionsshallnotbepermitted
lIDprovethattheyarenottradersandshallinol¥"allliabilities<whiCh.
thestatusoftraderentails.
A1'It.118.-EffectoffailuretoregUiter.
(1)Anypersonwho'ailstoregisterinaccordancewiththep.rovwonsof
thisCodemaynotholdhimse]£outtobeatradertothirdparties,
butheshallbe&hIeasIthougihhewereatrader.
(2)TherelevantprovisionsofBookIIofthisCodeshaHapplytobusiness
organisations.
Art.119.-Effectoffailuretocancelentries.
Anytregisteredpersonwhoassignshishusinessorletsitoutforhireshall,
untilhm;registrationiscancelled,bejointlyandseverallyliableforall
debtsmcurredbytheassigneeorlessee.
Art.120.-Effectofentries.
(1)AnypersonwhocausedanentrytobemadeinIJheregistershallnot
hepermittedtoshowthatsuchentryisinaccu:rateunlessanapplioatiol/.
ismadeforsuCh.entrytobea1tered.
(2)Tlilidpartiesshallnotbepermittedtoprovethmtheydidnotknow
ofafactenrteredin11Ihecommercialregister.
Art.121.-FactsrelatingtopersonsnottoaffeCtrightsofthirdparties.
ThefoliOWliingfactsshaUnotaffecttherightsofthirdpM'tiesingood
faithwheretheyhavenotbeenenteredinthecommercialregister:
(a)theminorityofthetrader;
(h)themarriageofthe,trader;
(c)themarriagesettlementofthetrader;
(d),thedissolutionofIJhemarl'iageofthe¥,ader;
(e)dIejudgmentdec:tar.ingthetraderincapable;
(f)anobjectionunderArt.16ofthisCode;
(g)thelimitationof~powersofamanagertothemanagementofa
branchoragency;
(ih)thedismissalofaJJl&D888r.
Art.122.
-
Factsrelatingtobusinessorganisationsnottoaffectrightsofthird
parties.
FactsreJatingtobusinessorganisationswhiohdoDotaffecttherightsto

38. COMMERCIAL CODE 2S
thirdpartieswheretheyhavenotbeenenteredinthe8O~cial register
ueprescribedbyBookIIofthisCode.
Chapter4.FinalProvisions
Art.123.-Matterstobeprescribed.
RegulationsshallheIIUldebytheMinistryof.CommerceandIndustryfor
thepurposeofcar1'yingi'ntoeffecttheprovisionsof1ihisTitlerelatingto:
(a)foreignpublicundertakingsunderArt.100(2)(0);
(b)themannerofkeepinglocalregistersandtbecentralregister;
(c)themannerofnumberingreg,istrations;
(d)documentaryevidencetoheproduced;
(e)formsformakingapplications;
(f)feestobepaidonregistrationandondeliveryofcopiesorextracts
fromregisters;
(g)publicationoftheofficialcommercialgazette,noticestobepub-
lishedthereinandcostsofsuchpubliioation;
(h)anyothermatterswhichIIUlYorshallheprescribed.
TITLEV.BUSINESSES
Chapter1.GeneralProvisions
Art.124.-Definirion.
Abusinessisanincorporealmovableconsistingofallmovabl4lproperty
hrou8httog~herandorganiaedforthepurposeofcarryingoutlPlyofthe
commercialac1livitiesspecifiedinArt.5ofthisCode.
Art.125.-Tradersandbusinesses.
(1)Every,traderoperatesabusiness.
(2)A,tradermayoperateseveralbusin~forthepurposeofcarrying
outV8!l'iouscommercialacti",iues.
(3)Aadermayoperateabusinessintb,e~pacibyofowner,usufruc-
tuaryor'lessee.Onlythepersonwhooperatesthebusiness.shallbe
deemedtoheatraderandtheownerorlessorofthebusinessshallnot
herregardedasatrader.
Art.126.-Principallnuinessandbranches.
(1)AbusinessIIUlYconsistofone]¥'incipalbWlin.eiSorofaprinoipal
businesswi1!h!branchesoragencieswhichshallbedeemedtobepart
ofthebusiness.
(2)Theheadofficeoft!biebusiness~beattheplacewhereIetrader
opeJIIl'teshisprinoiip,eJbusiness.

39. 26
COMMERCIAL CODE
(a)
WhereabranchoragenoyissoldorletoutforWrewithoutthe
principalbeingsoldorletoutforIhdre,suchsaleorleaseshallbe
deemedtobeasaleorleaseofabusinessandtheheadofficeofsuclJ.
businessshallbeattheplacewheretheassigneeorlesseeoperatesthe
branch~agency.
Chapter2.Elementsofabusiness
Section1.ConsistencyofaBusiness
Art.127..,--GoodwillandiTICorpor~elements.
(1)Abusinessconsists:mainlyc4a~will.
(2)Abusinessmayconsistofotheri!ncorporealelementssuchas:
(a)the,trade.name;
(b)tihespecialdesignationunderwhiclhthetradeiscarriedon;
(c)therighttoleasethepremisesinwhichthetradeiscarriedon;
(d)patentsorcopyri~;
(e)suchspecialrightsasattachtothebusine98itselfandnottothe
trader.
Art.128.-Corporealelements.
Abusinessmayconsistof~realelementssuchasequipmentorgoods.
Art.129.-Assetsandliabilities.
(1)Abusinessshallnormallynotincludetheassetsanddebtaofthe
trader,withtheexceptionoftherighttotheleaseofthepremises.
(2)NothinginthisArticleshallaffectthespecialrulesprovidedin
Art.2587oftheGiivilCodeandinArt.159and673oftlhlisCode.
Section2.GoodwillandUnfairCommercialCompetition
Art.130.-Definitionofgoodwill.
Thegoodwillresultsfromthecreationandoperationofabusinessandis
ofavaluewhieihmayvaryaccordingtotheprobableorpossiblerela<tions
betweenatraderandthirdpartieswhomayrequirefromhimgoodsor
services. -
Art.131.-PreservatWnofgoodwill.
Atradermaypreservehisgoodwillbyinstitutingproceedi.nt¥forunfair
competitionorbysettingupthelegalorcontractualprohibitionsprovided
inArt.30,40,47,55,144,158,159,204and205ofthisCode.
Art.132.-UnfaircommercialcompetiUon.
AtradermayclaimdamagesunderArt.2057oftheGivilCodefromany
personwhocommitsanactofcompetitionwhichamountstoafault.
'

40. COMMERCIAL CODE 27
Art.133.-Casesofunfaircompetition.
(1)Anyaotofcompeti1Jioneontrarytohonestcornmeroialpracticeshall
conetHuteafault.
(2)Thefollowingshallbedeemedtobeactsofunfaircom~:
(a)anyactslikelytomisleadcustomersregudiDgtheUndertaking,
productsorcommercialactivitiesofacompetitor;
(b)anyfalsestatementsmadeinthecourseofbusinees!Withaview
todiscreditingtheundertaking,productSorcommercialactivitiea
ofacompetitor.
Art.134.
-Effectofunfaircompetition.
(1)~hecourtmay,incasesofunfaircompetiJtion:
(a)cmlerthatdamagesbepaikl.bytheunfaircompetJitor;and
(b)makesudh:ordersasarenecess8l!ytoputanendtotheunfair
competition.
(2)'I1hecourtmayinparticular:
(a)ordertihepublication,atthecostsoftheunfaircompetitor,of
noticesdesignedtoremovetheeffectofthe~.1d,actaor
statementso,ftheunfaircompetitor,inaccordancewithArt.2120
oftheCivilCode;
(b)ordertheunfaircompetitortoceaseibisunlawfulactsinaccor-
dancewithArt.2122oftheGivilCode.
Section3.Trade-Names
Art.135.-Definition.
(1)Atrade-nameisthenameunderwhioha~n 0perate8hiebusiDese
and'Whichclearlydesi&nMest1hebusm-.
(2)Therelevantprov.iswnsofBook11ofthisCodeahaUapplytofirm.
namesusedbybusinessorganisations.
Art.136.-FamilyNameoftraderorassumednome.
Thetrad.e-name'maybethetrader'sfamilyname,'With.r'~ IUs
surname,oranassumedname,butallbusinesspapersIIhallbesignedby
thetraderinbiisownname.
Art.137.
-
Trader'sName.
(1)EverytradermaycarryORhistradeunderhisfamilyname,wi8hor
withouthispatronym.is:
ProvidedthatArt.45oftheGiNnCodeIIhallapplywhere8UChD8IDII
orpatronymicislikelytoCl-ea1eeonfusioninamannerpl8judWal
totheinterestsofanother1nder.

41. .
OoMM8RCIAL CoDE
(2)Whereproceedingsforunfairoompetitionlireinmtutedbyreuonof
~
ezeatedbytheuseofthetrader'sname,tiheCOU1"tmayo,rder
thatcbmagesbepaidbythetraderwhocreatedconfiu.tionandmay,
.baaddition,.GIfd~suchtradertoincludehissurnameorpatronymic
iu.!rlItrad.e-DQ1eaDastoobviate.confusion.
Art.138.-Auumearuame.
(1)'~~iradermaycarryonhistradeunderanassumednameprovided
.:0.011'DbJeisnotlikelytocreateconfusioninamannerprejudiaialto
theiDterestsofanothertrader.
(2)Wi. proceedingsforunfaircompetitionarein&~ byreasonof
confusioncreatedbytheuseofanassumedname,1Iheoourtmayorder
'tihatdam!i!esbe'P,&idbytbe,traderwhocreatedconfusionandmay,
inad4iiion.,prohibitsuchtraderfromusingtheassum'ldname.
Art.139.-A8&ignmentoftrade-ruame.
(1)'I1betrade-name.maynotbeassignedexcepttogetherwiIIhthebusiness
..1Vtiichit!efen.
(.,fti.~cfet.namemaynothe1l!Iedbytllhenewtraderunlessitisfoll.ow-
~.;hythenaneofsuChtraderandbytb.ewords"successor"or
"lfJ8IIee".Thenewtradermayonlyusehisownnameinsigningcom-
mem..t.~.
Section4.D~tinguishingMarks
Art.1400.-Definition.
(1)AdistinglMhingmarkisthename,design8Jl1i.on,signoremblem.
~eaahe~'WIhere tihetradeiscarriedonand'WthiChcIeaI:-
IydesignatesthebusinelNt.
(2).~(Iia~iIng IDm'kisnotcompulsory.
Art.1401.-Choiceofdistinguishingmark.
(1)A,tradermaychoG8e'anydist.i:nguishingmark.
~)~~
.may.JM,claimedonthegroundofunfair.competitionwhere
~!~
markitlikelytocreateconfusioninamtUlDer
prejudicialtoanotihlertraderhavingusedanidenticalorai.milar
dDtinguishingmark.
Section5.Righttotheleaseofthepremises
Art.142.-CivilCodeGPplicable.
WU)JQv.t~j-p.c&eto'lJ4epnwisionsof11hisSection,,thep~ns ofthe
piviJ.~.IIhaJl.app1ytetheftcbttotheleaseofthepremisesinwhich
thetradeiscarriedon.

42. COMMERCIAL CODE 29
Art.143.-Natureofthetradecarriedon.
Wherethecontractofleasespecifiesthenatureofthetrade
onbythelessee,thecontractmaybecancelledwherethe
onadifferenttrade.
tobecarried
lesseecarries
Art.144.-Prohibitionoftradebythelessor.
(1)Afterthecontractofleasehasbeenenteredinto,thelessormaynot
carryoninthesamebuildingatradesimilartothetradecarriedon
bythelessee.
(2)Wherethelessordisregardstheprohibitionprovidedinsub-art.(1),
heshallbeliablefordamagesandhisbusinessmaybeclosed.
Art.145.-Pro.hibitionfromassigningorsub-letting.
(1)NotwithstandingtheprovisionsofArt.2959oftheCivilCode,any
provisioninthecontractofleasewhichpreventsthelesseefrom
assigningthecontractofleaseorfromsub-letting1Ihepremisestothe
personwhobuyshisbusiness,orwhichmakessuchassignmentorsub.
leasedependentonthelessor'sconsent,shallbeofnoeffect.
(2)Anyprovisionwhichp,reventaorrestrictsatrusteeinbankruptcyfrom
exercisinghisrightsunderArt.1062ofthisCodeshallheofnoeffect.
Art.146.-Terminationofcontractoflease.
(1)Whereabusinessismortgaged,.thelessorshallinformthecreditors
whenheterminatestheleaseorheintendsamicablytotenninatethe
leaseortoenforceaprovisionforteNIlinationmadeinthecontract.
Theleaseshallterminatenotearlierthanonemonthfollowingsuch
noticetothecreditors.
(2)Wherenoticeisnotgiven,tJheterminationofthecontractoflease
shallnotaffectcreditorshavingsecuredrightsonthebusiness.
Art.147.
-
Lesseedeclaredbankrupt.
(1)Anyclauseinthecontraotofleaseprovidlingthattihecontractshall
terminateasofrightwherethelesseeisdeclaredbankruptshallbe
ofnoeffect.
(2)Wilrerethelesseeasdeclaredbankrupt,,thetrusteemaye~isehis
rightsunderArt.1040and1062ofthdsCodeandthelessormay
exercisehisrightsunderArt.1060IIiIld1061ofthisCode.
Section6.PatentsandLiteraryorArtisticCopyright
Art.148.-Patents.
(1)AbusinessmayconsistofpatentsrelatingtoregiMeredinventions,
trade-marks,designsandmodels.

43. 30
COMMERCIAL CODE
(2)Patentsshallbesubjecttotheprovi8ionsofspeciallaws.
Art.149.-Literaryandartisticcopyright.
(1)Abusinessmayconsistofliteraryorartisticcopyright.
(2)TheprovisionsofArt.1647-1674oftheCivilCodeshallapplyto
literaryorartisticcopyright.
Chapter3.Saleofabusiness
Section1.GeneralProvisions
Art.150-
CivilCodeapplicable.
WithoutprejudicetotheprovisionsofthisChapter,theprovisionsofArt.
2266-2367oft,11('CivilCodeshallapplytothesaleofabusiness.
Art.151.
-
Scopeofapplicationofthi~Chapter.
(1)TheprovisionsofthisChapterregardingthesaleofabusinessshall
apply:
(a)toanysaleorassignment,evenunderadisguisedform;
(b)toanysalebyauctionattherequestofjointowners.
(c)toanydistributionaccompaniedbycompensation,
wheresuchsaJ,e,assignmentordistributionrelatestoabusiness
oritsgoodwillortoabranohoragencyass~$l1edwi1Jhouttheprin-
cipalbusinessbeingassignedorthegoodwillofsuchbranchor
agency.
(2)TheprovisionsofthisChaptershallnotapplytothesaleofindividual
partsofabusinessotherthanthegoodwill,unlesssuchsaleentai~sor
concealsthesaleoftheblL~inessorofthegoodwillofabusiness.
Sections2.Fonnalities
Art.152.-Saletobeinwriting.
Thesaleofabusinessshallbenullandvoidunlessevidencedinwriting.
Art.153.
-
Particularsinthecontractofsale.
Tihecontractofsaleshallspecify:
(1)theturnoverandprofi.tsmadeduringthelastthreefinancialyears
orsincethebusinesswascreatedoracquiredbytheseIler,where
suchcreationoracquisitiontookplacelessrtihantfll'I'OOyearsbefore
thesale;
(2)Wlherethebusinessiscarriedoninpremisesletoutforltir6,thedate
onwhichthecontractofleasewasmadeandistoexpireandthesame
andaddressofthelessor;

44. COMMEJiCIAL CODE 31
(3)themortagagesonthebusiness,Wfany.
Art.154.-Cancellationofthecontract.
(1)'l1hecourtnmycancel1I!becontractofsaleontheapplicatit1nOfdie
buyerwhereitisofopinionthat,thebuyerwasinjuredbYthe''failure
tocomplywithanyoftherequirementsp,rovidedinArt.153.
(2)Thecourtmaycancelthecontractofsaleorreducethepriceof,the
saleontheapplicationoftlhebuyerwbereitisofopiniontbBt.'"
buyerwasinjuredbyanyinaccuratestatelneotmadenndeiArt.153.
(3)Proceedingsundersub-art.(1)and(2)shall
ibeiaslituted.:'duriJJs
theyear<withinwhichthecontract'W88made.
Section3.DutiesoftheSeller
Art.155.-Dutytohandover.
(1)Thesellershall,WmdovertJhebusiinesstoI!hebuiyer.
(2)Unlessotherwiseagreed,thesaleof8.businessimpiieetbesauof"aU
theconhtituentpartsofsuchbusiness.
(3)Thesellershallenablethebuyertotakeoverthe~
bybend.
ingtoihimallneces58l"Ydocumentsandinformation.
(4)TheprovisionsoftheCivilCodeandofspeciallawssliaUapplyto
theassignmentofpatentsandcopyrigIhts.
Art.156-BooksandaccountS.
(1)Onthedayofthesale,thesellerandthebuyershancheck.allat>
countsandprepa,reaninventoryofallaccountingdooUmenttiand
books.
(2)Thesellershallretainallhisbooksandacco\lDti.ngdocumeotsand
thecorrespondenceseotor,eceivedbyhim,buthei.ban,notwith.
standinganyprovisiontothecontrary,keepthem.available{orin.
spectionby1ihebuyerforaperiodoftwoyears.
Art.157.-Commereialcorresporn;lence.
Thesellershallhandtothebuyerallcorrespondencerelatingtothe
businesswhichihemayreceiveafterthesaleofthebusiness.
Art.158.-
SellerprohibitedfromcomIJeriJl-g.
(1)DuringfiveyearsfromrJJhesale,thesellershell.re(rainfromdoing
~
actofcompetitionlikelytoinjurethebuyer.Hemaynotcarry
on,inthevicinityof1Jhebusinesshesold,atradesiInia:ttothe
tradecarriedonbythebuyer.
(2)'l1hecontractofealemayspecify<1Iheextentofsudb~on which
shallinnocaseexceedfive'Years.

45. . CeuMII1ICJa;LCoDB
Art.159.-RisM.of.ubaequmtbuyer.
AprohibitionunderArt.158!iballbedeemedtobeanelementofthe
~ uadID8)I'~euforcedbythebuyerandhisheirsendbyanyeubse.
..,buyer.
Section4.DutiesoftheBuyer
AIrt.H6 Dutytopay,II.price.
'PMn,ersli8l1paytbepriceinthemannerprovidedinthecontractor,
,
Ipeoi81provisionismade,incub.Notwithstandinganyagreement
totheCODtruy,tlhepnm.ionsofArt.162ofthis~eshallapply.
Art.161.-Publicati4~f)fthesaL,.
Thebuyerahallensurethatnoticeofsaleispublishedinaccordancewith
theprovisionsofArt.164-170ofthisCode.
An~.I6f.~.~ fromdispoBilisofproceedsof1tIle.
(1)
Afttrrthesale,thepriceofthesaleshallDOtbepaidtotheseDeruntil
t.Le~.oftimelormakingapplicationstosetasideexpiresor,where
anymob.appJicationhasbeenmade,11DtHthe~tsofthecreditors
haftbeeneett1edbyagreementorbythecourtandsuchcreditors
havebeenpaid.
(2)Untilthattime,nopa}'IIlentorassignmentoftheclaimshallaffect
thel'ijbtaoftheaeIler'.creditors.
{3)Tbe.CODb8ctofsalemayprovidethatthebuyershalldepoBittheprice
ofthesale:withathirdparty.AnysUdhdepositshalldischargethe
~18r~ hisliabilitiestotheseHerhUtthebuoyer&hallremain
liaWe.te!&beseller'screditors.
Alt.165'.---GUdrilntt1e'r1ftheseller.
Untilbeisfullypaid,theseller.ha1Ibesecuredbyalegalmortgegeand
8Iba11ibave1JherighttocancelthecontraotasprovidedinArt.173-176of
tJdIrCdcIt.
Section5.PublicationoftheSaleandRights
oftheSeller'~Cl'edftors
Arl.161.-PUblicationof.thesale.
(1)
"..busineIWisIOld,thebuyer&hallensure.thatanoticetothis
effectispublishedintheofficialCODlItlercialgazetteandinanews-
"'-emp.wered tepWilishlfJ8alnotieesci,rculatingintheTaklay
Guezatwhere~eheadofficeofthebusinessisllituate.

46. COMMERCIAL. CODE
33
(2)Wherethebusinesssoldcomprisesbranchesoragenciessituatein
dift'erentplaces,thenoticeundersub-art.(1)shallbepublishedina
newspaperempoweredtopublishlegalnoticescirculatiDginthe
TaklayGuezatwhereeachbranchoragencyissituate.
Art.165.-Particularstobepublished.
NoticeunderArt.164shallshow:
(a)thenamesandaddre&&esofthesellerandbuyer;
(b)theobjectsandaddres&ofthebusinesa;
(c)theobjectsandaddresaofanybranchoragencywhichmayhave
beensold!WiththebusineS&;
(d)thedateandnatureofthecontractofsale;
(e)illbepriceoftlhesale;
(f)theaddressforaervice&ttheplacewherethebusinessDaituate.
Art.166.-Timewithinwhic.htopublishnotices.
(1)Noticesunder.Art.164shallbepublishedduringtheJDDnthwithin
'WIMobthesaletookplace.
(2)Latenoticeshallbeva1id,bUitthebuyerDl8IYbeliableforanydamage
cauaedtothesellerortotheseller'screc:Utorsbyreasonofthedelay.
Art.167.-Applicationtosetaside.
(1)Withinonemonthfromthepublicationofthelastnotice,anycreditor
ofthesellermay,evenwherehisclaimisnotdue,move1I11ecourt
tosetasidetheproceedsofthesalt'!andshallnotifythebuyerathis
addressforservice.
(2)Theapplicationshallshowt.henameandaddressofiIIhecreditorand
theamountandbasisoftheclaim.
(3)WherenoticesunderArt.164havenotbeenpublishedordidnot
containalltheparticularsrequiredunderArt.165,anapplicationto
setasidemaybemadeatanytime.
(4)Untiltheapplicationisdecidedon,theburyeror1Jhirdpartywi11h
whomtheproceedsofthe.salehavebeendepositedmaynotdispose
thereofandtheprovisionsofArt.162shallapply.
Art.168.-Applicationrejected.
ThebuyermaymovetheCOUl'ttor~jeotanapplicationwhichisnotcor-
rectinform,orwhichislateormadewithoutgoodcause.

47. 34 COMMERCIAL CODE
Art.169.-Distributionoftheproceedsofthesale.
(1)Theproceedsofthesaleshallhedistributedbyagreementorbyorder
ofthecourtbetweenthecreditorshavingaclaimsecuredbythe
businessandthecreditorshavingmadeanapplicationtosetaside.
(2)Thesurplus,ifany,shallhehandedtotheseller.
Atit.170.-Overbidbycreditors.
(1)CreditorsunderArt.169(1)maymovethecourttoorderthatthe
businessbesoldbyauctionwrherethepriceofI1hesaleisinsufficient
,tomeettheirclaims.
(2)Thecourtshallorderthesalebyauctionandthepriceoftthesale
shallbehigherbyonetenththanthepricespecifi~inthecontract
ofsale.
(3)Wherenothirdpartypresentshimselfatthesale,thebusinessshallbe
soldtothecreditormakingthehighestbid.
Chapter4.Mortgageofabusiness
Section1.GeneralProvisions
Art.171.
-
Mortgagepossibl~.
(1)AbusinessmayhemOJJtgaged.
(2)MOJJtgageofabusinessflowsfromthelaworacontract.
(3)Anymortgage,whetherlegalorcontractual,shallbe.registered.
Art.172.-MortgageundertMlaw.
(1)Thefollowingpersonsshallhavetheirclaimssecuredbyalegalmortg-
ageonthebusiness:
(a)thesellerofabusiness,forsolongasthepriceof,thesalehas
notheenful1ypaidtohim;
(b)1hecreditorsofbankrupttrader.
(2)TherelevantprovisionsofBookVofthisCodeshallapply,toa
mortgageundersub-art.(1)(b).
Section2.
.
Mortgageofthesellerand
actionforthecancellationofthecontractofsale
Art.173.-Legalmortgage.
f'
..
(1)Whereapersonsellsabusinessandthepriceofthesaleisnotfully
paidtohim,thepaymentof,thepriceorsuchpartthereofasisstill
dueshallbesecuredbyalegalmortgageonthebusinesssold.

48. COMMBRCIAL Coos 85
(2)T1heprovisionsofsub-a,rt.(1)shallnotappLyunlessthesaJe.was
madeinwritingand,themortgagehasbeenregisteredinthemanner
providedhylawduringthemonthwithinwibiohtheaaietookplace.
Art.174.-ActionfortheconceUationofthecontraCt.
ThesellerwholisnotfWIypaidmaycancelthecontraotofP.The
cancellationofthecontractshallnotaft'ectthirdpartiesunlesstthe
mortgagehasbeenregisteredasprovidedhylawand~epossibilityof
bringinganactionf~rcancellationhasbeenenteredintheregisterin
whichthemortg~ewasregistered.
Art.175:-Registrationoflegalmortgage.
(1)'DheentryofthelegalmOl"tgageintheregistershaHIhow:
(a)thenamesandaddressesofthesellerandbuyer;
(h)thedateandna'tureofithecontr8lctofsaleandthepirceofthe
sale;
(c)theamountofthepurehasepricepaid;
(d)theconditionsfordemandingpaymentandtIherateofinterest:
(e)thepossihi1ityofbringinganactionunderArt.174;
(f)theobjectsandaddressof!thebusiness;
(g)thescopeofthemortgage;
(h)theaddressofanybranchoragencymorlpgedwith1II1eprin-
cipalbusiness,ifany.
(2)Themortgage.shallapplytosuch.partsonlyofthebu8inessasarea-
presslyspecifiedintheentry.
Art.176.-Bringingofactionforcancell4tion.
(1)Thesellerwhocancelsthecontractonthegroundthatbe...~
beenfullypaid(Art.174)shall,whateve;rtheputoftheprice8Iill
due,takebackthewholebuamessinitsconditiononthedayofCan-
cellation,butnoti.Dcludingnewpartsa~ otertheooutraotof
sale.wasmade.
(2)TheincreaseorreduotiDnintheftlueofthepartaI01dabaiJ.hetabu
intoaccountinsettling,therightsoftheselleruuIbuyer.
Section3.ContractualMortgage
Art.177.-ConditionsofcontrootualmortgtJB8.
(1)AnypersonwhoiscapableundercivillawuuIwho0W1IIabU8inell
maymortgagesuchbusinessnotwilihstandingt:b8tbedoesDOtoperate
ithimseH.

49. 36 COMMERCIAL CODE
(2)Tihemortgageshallbeinwritingandshallberegisteredduringthe
monthwithinwhichthemortgagedeedisdrawnup.
Art.178.
-
Registration.
(1)Theentryofthemortgageintheregistershallshow:
(a)thenamesandaddressofthemortgagorandmortgagee;
(b)thedateandnatureofthemortgagedeed;
(c)theclaimsecuredbymortgage,theconditionsonwhichitmay
becomedueandtherateofinterest;
(d)theobjectsandaddressofthebusiness;
(e)thescopeofthemortgage;
(f)theaddressofanybranchoragencymortgagedwiththeprincipal
business,ifany.
(2)Themortgageshallapplytosuchp.artsonlyofthebusinessasare
expresslyspecifiedintheentry.
Section4.MannerofRegisteringMortgages
Art.179.-Placeofregistration.
(1)'I1hemOJ:tgageshallberegisteredbytheofficial
MinistryofCommerceandIndustrywithkeeping
Guezattheregisterofmortgagesofbusinesses.
(2)'I1hemortgageshaHbeenteredintheregisterkeptintheTaklay
Guezatwithinwhosejurisdictionthebusinessissi,tuate.
(3)Wherethebusinesscomprisesbranchesoragenciessituateoutsidethe
jurisdictionoftheTaklayGuezat,.themortgageshallbeenteredin
theregisterkeptineachTaklayGuezatwithinwhosejurisdictioneaoh
branchoragencyissituate.
entrustedbythe
ineachTaklay
Art.180.-Removalofthebusiness.
(1)AdebtorwhowishestoremovehisbusinesssheHinformthesecured
creditors.ThedebtshaHbecomedueimmediatelywheresuchnotice
isnotgivenorremovaliseffectedearlierthanonemonthfromsuch
notice.
(2)CreditorsmayexercisetheirrightsunderArt.188wheretheyare
ofopinionthatther6JD.ovaiwouldreducethevalueofthebusiness.
(3)Wherecreditorsagreetotheremovalandthebusinessremovedremains
withinthesameareaofjurisdiction,thecreditorsshallapplyforthe
entryintheregistertobevariedaccordingly.Wherethebusinessis
removed,toanotherplace,thecreditorsshaHensurethatanewentry
ismadeintheregisterkeptintheTaklayGuezatwithinwhosejuris-
dictionthenewheadofficeissituate.

50. COMMERCIAL CODE 87
(4)Whereanentryisvariedoranewentryismadeunderaub-ert.(8),
suchvariedornewentryshall.haveeffectuUomthedayofthe
originalentry.
Art.181.-Principalclaimandinterest.
Reg~str/ltionshallhavethe.effectofsecuringtwoyearsinte;reatinthesame
rankastheprincipalclaim.
Art.182.-Durationofregistration.
RegistrationshallSecuretheclaimforfiveyearsfromthedateofresiatra-
tionandshallceasetohaveeffectwherenotrenewedbeforetheexpiryof
fiveyears.
Art183.-Cancellation.ofregistration.
Registrationshallbecancelledeitherwhereallinterestedparties80agreein
writingorfollowingafinaljudgmentbythecourt.
Art.184.-Communicationofentriestothirdparties.
Anypersononpaymentoftheprescribedfeemayreq'l!iretheoffi~in
chargeoftheregisterofmortgagestodelivertoh~acopyofany.extract
fromtheregisteror,wherethereisnoentryforwhichheissearching,a
certificatetotheeffectthatthereisnoentry.
Art.185.
-
Liability.
Theofficialinchargeoftheregisterofmortgagesshallbeliableforfail.
ingtomaketheentriesheisrequiredtomakeandforanyerrororomis-
sioncommittedindeliveringacopyoracertificateunderArt.184.
Art..186.-Regulations.
(1)Regulationsshpllspecify:
(a)themannerofkeepingregistersofmortgages;
(b)themannerofmakingorcancellingentries.
(2)Thefeestobepaidonregistrationandondeliveryofextractsorcerti.
ficatesunderArt.184shallbeprescribedbylaw.
Section5.RightsofSecuredCreditors
Art.187.-Businessassignedorletoutforhire.
(1)Notwithstandinganyprovisiontothecontrary,thedebt()rmayassign
hisbusinessorletitoutforhire.
(2)Itmaybeprovidedthatthemortgageshallbecomedueonthebusi-
nessbeingassignedorletoutforhire.Suchprovisionshallbeofno
effectunlessitisenteredintheregister.

51. 38 COMMERCIAL CODE
Art.188.-Reductionoftheguarantee.
Wherethedebtorreducesorislikelytoreducethevalueofthebusiness
inparticularbyremovingit,byfailingtopaytherentofthepremises
inwhichthetradeiscarriedonorbyreducingthestocks,anysecured
creditormaydemandthatnewsuretiesbeproducedand,wherenotpro-
duced,maymovethecourttoorderthathisclaimbepaidforthwith.
Art.189.-Attachmentofbusiness.
(1)Asecuredcreditorwhoseclaimisnotpaidonbecomingduemay
movethecourttoorderattachmentofthebusinesswithaviewtocaus-
ingittobesoldbyauction.Attachmentmaynotbeeffectedearlier
thanonemonthfromthecreditorhavingdemandedpaymentandnot
havingbeenpaid.
(2)Anyprovisiontotheeffectthatacreditmay,failingpayment,attach
thebusinessorcauseittobesoldwithoutcomplyingwiththerequire.
mentsofthelaw,shallbeofnoeffect.
Art.190.-Righttofollowthebusiness.
(1)Asecuredcreditormayclaimthebusinessfromathirdparty,asthe
mortgagefollowsthebusinessintowhateverhandsitmayfall.
(2)Thethirdpartymayavoidattachmentbypayingfullyallsecured
creditors.
Art.191.-Scopeofmortgage.
(1)Themortgagechargesthebusinessinitsconditionatthetimeofat-
tachment,whatevertheimportanceorvalueofitspartsatthattime.
(2)Themortgageshallapplytosuchpartsonlyofthebusinessasare
expresslyspecifiedintheentry.
Art.192.-Preferredrights.
(1)Securedcreditorsshallhaveapreferredrightontheproceedsofthe
saleofabusiness.
(2)Asbetweensecuredcreditors,rightsshallrank.inaccordancewiththe
dateonwhichsuchrightshavebeenregistered.Mortgagesregistered
onthesamedayshallrankconcurrently.
(3)Thelegalmortgageofthesellershallrankbeforecontractualmort-
gages.
Art.193.
-
Mortgagesmaybesetupagainstthecreditorsofabankruptperson.
TherelevantprovisionsofBookVofthisCodeshallapplywhereregis-

52. COMMERCIAL CODE 39
teredmortgagesonabusinessaresetupagainstthecreditorsofabauk.
ruptperson.
Chapter5.HireofaBusiness
Art.194.-CivilCodeapplwable.
(1)Abusinessmaybeletoutforhire.
(2)WithoutprejudicetoArt.195-2()5ofthisCode,theprovisionsof
Art.2'896-2974oftheCivilCodeshallapplywhereabusinessislet
outforhire.
Art.195.-PublwatWnofthecontractoflease.
(1)Acontractofleaseshallnotaffecttherightsofthirdpartiesunlessit
isinwritinganditispublished,ontheapplicationofeitherparty,
intheofficialcommercialgazetteandinanewspaperempoweredto
publishlegalnoticescirculatingattheplacewheretheheadoUiceof
thebusinessissituate.
(2)Noticespublishedundersub-art.(1)shallshow:
(a)thenamesandaddressesofthelessorandlessee;
(b)thedateandnatureofthecontract;
(c)theobjectsandaddressofthebusiness;
(d)theperiodoftimeforwhichthecontraCtillenteredinto.
Art.196.-Registration.
Theownerofthebusinessletoutforhireshallcausehisnametobestruck
offandthelesseeshallcausehisnametobeenteredinthecommercial
registerinaccordancewiththeprovisionsofTitleIVofthisBook.
Art.197.-Liabilityofthelessor.
UntiltheprovisionsofArt.195and196havebeencompliedwithand
withinonemonthfromsuchformalitieshavingbeencompleted,th&
ownershallbejointlyandseverallyliablewiththelesseeforan:ydebt
inCUl'l'Mbythelesseei,noperatingthebusiness.
Art.198.-Particularsonbusinesspapers.
Thecontractofleasemaybecancelledwherethelesseefailstoaddthe
word"lessee"onallhisbusinesspapers.
Art.199.-Dutiesoflessee.
Thecontractofleasemaybecancelledwherethelesseefailstopaythe
agreedrentontheagreeddayordoesnotoperatethebusinesswiththe
caredue.byagoodtraderandinaccordancewiththeobjectsofsuch
business.

53. ...
'
40 COMMERCIAL CODE
Art.200
(1)
-
Guarantee.
Inadditiontotherent,thecontractof.leasemayprovidethatthe
lesseeshallproducesuretiestoguaranteethefulfilmentofhisobli-
gationstowardsthelessororthirdparties.
(2)Notwithstandinganyprovisiontothecontrary,thesuretiesshallbe
fullyreturnedtothelesseeupontheterminationofthelease,where
thelesseehasfulfilledhisobligationsandnoapplicationismadeby
thecreditorswithintheperiodoftimespecifiedinArt.202(3).
Art.201.-Lesseepersonallytocarryouthisduties.
Thelesseemaynotassignthecontractofleasewithoutthewrittenconsent
ofthelessor,asacontractofleaseismadeonthebasisofthepersonal
qualificiationsofthelessee.
Art.202.-Terminationofco~tractofloosetobepublished.
(1)Wherethecontractofleaseterminates,noticestothiseffectshall
bepublishedasprovidedinArt.195(1).
(2)Noticespublishedundersub-art(1)shallshow:
(a)thenamesandaddressesofthelessorandlessee;
(b)theobjectsandaddressofthebusiness;
(c)thedateofterminationofthecontract;
(d)theamountoftheguaranteeunderArt.200,ifany.
(3)Theownerofthebusinessshallbeliabletothirdpartieswherethe
suretiesunderArt.200arereturnedtothelesseeearlierthanone
monthfromthepublicationofthelastnotice.
Art.203.-Debtsoflesseeshallbecomedue.
Anyclaimwhichacreditormayhaveagainstthelesseeshallbecome
dueontheterminationofthecontractoflease.
Art.2'04.-Prohibitionoftradebythelessor.
(1)Duringthecurrencyofthecontractoflease,theownerofthebusiness
maynotcompetewiththelesseebycreatingoracquiringabusiness
havingsimilarobjects.
(2)Wheretheownerdisregardstheprohibitionprovidedinsub.art.(1),
heshallbeliablefordamagesandhisbusinessmaybeclosed.
Art.205.-Prohibitionoftradebythelessee.
(1)Thepartiesmayagreethat,upontheterminationofthecontractof
lease,thelesseeshallnotcompetewiththeownerofthebusinessby
carryingonatradesimilartothetradecarriedonbytheowner.
(2)Anysuchprohibitionshallnotbeeffectiveformorethanfiveyears.

54. COMMERCIAL CODE 41
Chapter6.ContributionofaBusiness
toabusinessorganisation
Art.206.-Contributiontobepublished.
Whereabusinessiscontributedtoa
orinoperation,noticestothiseffect
Art.195(1).
businessorganisationbeingformed
shallbepublishedasprovidedin
Art.20-7.
-
Particularstobepublished.
NoticespublishedunderArt.206shallshow:
(1)thenameandaddressofthecontributor;
(2)theobjectsandaddressofthebuisinesscontributed;
(3)thefirm-name,natureandheadofficeofthebusinessorganisationto
whichthecontributionismade;
(4)thedateofthememorandumofassociation.
Art.208.
-
Objectiontocontrib",tion.
(1)DuringthemonthwithinwhichthelastpublicationunderArt.206
wasmadeanycreditorofthecontributormay,evenwherehisclaim
isnotdue,sendanoticetotheheadofficeofthebusinessorganisa.
tiontowhichthecontributionwasmadetoth~effectthatheobjects
tothecontribution.
(2)Wherenopublicationwasmadeoritisinvalid,acreditormay
mak"
hisobjectionatanytime.
Art.209.
-
Stepstakenbypartners.
(1)WithinonemonthfromanapplicationunderArt.208beingmade.
anypartnermaymovethecourttodissolvethebusinessorganisation
underformationortocancelthecontributionmadetothebusiness
organisationinoperation.
(2)Whereanapplicationundersub-art.(1)isnotmade,thebusiness
organisationshallbejointlyandseverallyliablewiththecontributor
wherethecontributioniscancelled.
BOOKII.BUSINESSORGANISATIONS
TITLEI.GENERAL PROVISIONS
Art.210.-Businessorganisationdefined.
(1)Abusinessorganisationisanyassociationarisingoutofapartner-
shipagreement.
(2)Anybuainessorganisationotherthanajointventureshallbedeemed
tobealegalperson.

55. "
42 COMMERCIAL CODE
Art.211.-Pro.lnershipagreement.
Apartnershipagreementisa.contractwherebytwoormoreperIODIwho
intendtojointogetherandtocooperateundertaketobringtopther
contributionsforthepurposeofcarryingoutactivitiesofan_DO~c-
natureandofparticipatingintheprofitsandloS8e8ari8ingoutthereof,
ifany.
.
. ..
Art.212.
-
Differentbusinessorganisalions.
(1)TherearesixformsofbusinessorganisationsunderthisCode:
(a)ordinarypartnership;
(b)jointventure;
--
(~).generat-parmenmp;--
(d)limitedPartnership;
(e)sharecompary;
(f)privatelimitedco~pany;
(2)Specialprovisionsapplicabletocooperativeorganisationsmayhe
pNIGrihed.
Art.213.-Commercialbusinessorganisations.
(1)Anybwdnessorganisationotherthananordinarypartnershipmaybe
acommercialbusinessorganisationwithinthemeaningofArt.10(1)
ofthisCode.
(2)Whereacommercialbusinessorganisationiscreatedintheform
ofanordinarypartnershiporwheretheformoftheorganisation
isDOti!lpecified,thecommercialbusinessorganisationshanbedeemed
tobeageneralpartnership.
Art.214.
-
Formationtobeinwriting.
Theformationofanybusinessorganisationotherthanajointventure
shallbeofnoeffectunlessitismadeinwriting.
Art.215;--:-Vowpropisions.
(1)Anyprovisiongivingalltheprofitstoonepartnershallbeofno
effect.
(2)Anyprovisionrelievingone01'moreofthepartnersofhisshare
inthelossesshallbeofnoeffect.
Arti2~.-Agents.
(1)Abusinessorganisationshallacquirerightsandincurliabilitiesby
.
itsagentsinaccordancewiththeprovisionsrelatingtoagency.
(2)Abusinessorganisationshallactinlegalp~.:...byits aaents.
-

56. COMMBBCl4£CoR u
(.3)Al1Y8UJIUDOJJ8tobe:aervedonabuain-orp8i8atiou..tw.
servedatthehead4fice.
Art.217.-Diaolutionunderthelaworbyagreemerit.
Anybusinesaorganiaationehallbediuolved:
(a)whereitspurposehasbeenachievedorcannotbeachieved;
(b)wherethepartneRagreetodiuolutioBpriortotheespiryoftheterm
forw'hichthebusine!18organisationwasformed;
(c)wherethetermforwhichthehuainesaorganisationwasformedexpire8,
nnI-thepartnersagreetocontinuethebusineesorgaaisatioQ.
Art.218.-Dissolutionbythecourt.
(1)Notwithstandinganyprovisiontothecontrary,abu.lb1e&aorganiation
maybediseolvedforgoodcauaebythecourtontheapp1icatiaaof.
partner.
(2)ThereshallbegoodcauaeinparticularwhereaJ'811netseriouIiyf8iI8
inhisdutiesorbecomesthroopinfnmityorpermanent
m-01'
,.
anyotherreasonincapableofcarryingoUthisdutiesorwhere
--
disagreementexistsbetweenthepartneD.
Art.219.-Publicity.
(1)AnybusinessorganisationotherthanajointventUresha11bemade
knowntothirdparties.
(2)Suchpublicityshallbemade:
(a)byanoticepublishedinanewspaperempowered'topublUhlepl
notices;and
(b)bythedepositoftwocopiesofthedocumentsprovided:inArt.221
withtheofficialinchargeofthecommercialregister;and
(c)byregistrationinthecommercialregister.
Art.220.-Publicationofnotice.
AnoticeunderArt.219(2)(a)shallbepublishedio.anewspaperempow-
eredtopublishlegalnoticescirculatingattheplacewheretbeheed..office
issituate.
Art.221.-lJeprniniriIocument8~
(1)AdepositunderArt.219(2(b)shallbemade
wi'"
theal&cIalin
chargeof~eCOb1mercialregisterattheplacewherethehead.officeis
lituate.

57. 44 COMMBBCIAL CoDB
(2)Twocopiesofthememorandumandallcomplementarydocuments,
ifany,shallbedeposited.
(3)Theofficialshallkeeponecopyofthedocumentsdepositedandshall
sendthesecondcopytotheDepartmentofthecentralcommercialre-
gisterprovidedinArt.90ofthisCode.
(4)Anypersonmay,onpaymentoftheprescribedfee,requiretheoffic-
ialinchargeofalocalorofthecentralcommercialregistertodeliver
tohimacopyofallentriesrelatingtoabusinessorganisation.
Art.222.-Registration.
(1)Theapplicationforregistrationinthecommercialregistershallbe
depositedwiththedocumentsspecifiedinArt.221.
(2)TheprovisionsofArt.95-99ofthisCodeshallapply.Theofficialin
chargeoftheregistershallexaminewhetherthelegalconditionsre-
latingtotheformationofthebusinessorganisationhavebeenfulfilled.
Art.223.-Effectofpublicity.
Abusinessorganizationshallhavenolegalexistencenorpersonalityuntil
alltheprovisionsofthisCoderelatingtopublicityhavebeencompliedwith
andregistrationispublishedinaccordancewithArt.87ofthisCode.
Art.224.-Modifications.
(1)Anymodificationinthememorandumofassociationshallbedeposited.
(2)Anymodificationofafactpublishedandregistered,shallbepublish.
edandtheentryshallbecorrectedinaccordancewithArt.108ofthis
Code.
Art.225.-Branches.
(1)Whereabusinessorganizationcomprisesbranchesoragenciessituate
inplacesotherthantheplacewherethehead-officeissituate,the
provisionsofthisCoderelatingtopublicityshallbecompliedwithin
eachplacewhereabranchoragencyissituate.
(2)Registrationinthecommercialregistershallbemadebywayofsum.
:maryregistrationandshallrefertotheprincipalregistration.
(3)Asummaryregistrationshallcontainthesameparticularsasaprin.
.
cipalregistrationandshallshowtheaddressofthebranchandthe
nameofthemanagerofthebranch.

58. COMMERCIAL CODE 45
Art.226.
-
Cancellationofregistration.
Whereabusinessorganisationisdissolvedandwound-up,theliquidators
shallapplyfortheregistrationofthebusinessorganisationinthecom-
mercialregistertobecancelled.Thebusinessorganisationshallhaveno
legalpersonalityaftercancellationhasbeenpublishedintheOfficialCom-
mercialGazette.
TITLEII.ORDINARYPARTNERSIDP
Chapter1.GeneralProvisions
Art.227.-Definition.
A'partnershipisanordinarypartnershipwithinthemeaningofthisTitle
whereitdoesDOthavecharacteristicswhichmakeitabusineasorganisa-
tioncoveredbyanotherTitleofthisCode.
Art.228.-Jointownership.
(1)Theprovisionsof'thisTitleshallnotapplytojointownership,where
propertyisheldbyseveralpersonsforreasonsoutsidetheircontrol.
(2)Jointownersmayagreetocreateapartnershipforthemanagementof
thepropertyjointlyowned.
Chapter2.Contributions
Art.229.-Natureandamount.
(1)Eachpartnershallmakeacontriblltion,whichmaybeinmoney,debts,
otherpropertyorskill.
(2)Propertyortheuseofpropertymayformacontribution.
(3)Unleasotherwiseagreed,contributionsshallbeequalandoftheDature
andextentrequiredforcarryingoutthepurposesofthepartnership.
Art.230.-Guarantee.
(1)Wherepropertyiscontributed,thecontributingpartnershallcarryout
thedutiesofaseller.
(2)Wheretheuseofpropertyisco~~uted,thecontributingpartnershan
carryoutthedutiesofalessor.'.
(3)Whereapartnercorltributesadebt,heguaranteesonlytheexistence
ofthedebtandnotthesolvencyofthedebtor,unleasotherwiseagreed.
Art.231.-Risks.
(1)Wherepropertyiscontributed,therisksshallpasstothepartnership

59. 46 COMMERCIAL CODE
inaccordancewiththeprovisionsrelatingtosale.
(2)Wheretheuseofpropertyiscontributed,therisksshallremainwith
thecontributingpartner.
Art.232.-
Interest.
Wheremoneyiscontributed,thecontributingpartnershallbeliableto
thepartnershipforinterestthereonwherepaymentismadeafterthedue
date.
.
Chapter3.ManagementofthePartnership
Art.233.-Modificationoftheagreement.
(1)ThepartnershipagreementmaybevariedonlywiththeCODBeDtofall
thepartners.
(2)Thepartnershipagreementmaycontainaclauseprovidingforthe
variationofnparticularclausewiththeconsentofthemajorityofthe
partners.
Art.234.-Majority.
(1)Wherethelaworthepartnershipagreementprovidesthatadecision
maybetakenbyamajorityofthepartners,themajoritymeansa
majorityoftheindividualpartners.
(2)Thepartnershipagreementmayprovidethatthemajorityshallbe
calculatedonamajorityholding,inthepartnership.
Art.235.-Specialacts.
Theconsentofanthepartnersshallberequiredfortheappointmentof
anattorneyorthecarryingoutofanyactwhichgoesbeyondnormalpart-
nershippractice.
Art.236.-Appointmentofmanagers.
Allthepartnersshallhavearighttoactasmanagers,unlessthepartner-
shipagreementoradecisionofthepartnershiphasappointedoneormore
ofthepartnersorathirdpartytobethemanager.
Art.237.-Morethanonemanager.
(1)Whereseveralpersonshavebeenappointedmanagersandtheirduties
havenotbeenspecifiedorwhereithasnotbeenspecifiedthatthey
actjointly,theymayeachcarryoutactsofmanagement.
(2)Eachmanagermayobjecttodealingscontemplatedbyothermanagers.
(3)Theobjectionshallbedecidedonbyamajorityvoteofallthepartnen.

60. COMMERCIAL CODE 47
Art.238.-Jointm4JUJgement.
(1)Wherejointmanagershavebeenappointed,decisionsshallbetaken
jointly.
(2)Whereanactofmanagementisofanurgentnatureandtheother
jointmanagerscannotbeconsulted,onejointmanagermayactalone.
Art.239.-MaJUJgerappointedunderpartnershipagreement.
Apartnerappointedasmanagerunderthepartnershipagreementmaycar-
ryoutallactsofmanagementindisagreementwiththeotherpartnersin
theabsenceoffraud.
Art.2400.-RevocationofthestatutorymaJUJger.
(1)TheappointmentofamanagerappointedunderArt.239maynotbe
revokedorhispowersrestrictedbytheotherpartners,saveforgood
cause.
(2)Wherethereisgoodcause,theappointmentmayberevokednotwith.
standinganyprovisiontothecontraryinthepartnershipagreement.
(3)Grossbreachofdutyorunfitnesstoexercisepowersofmanagement
shallconstitutegoodcauseunderthisArticle.
Art.241.-Rightsanddutiesofma1lagers.
(1)Theprovisionsrelatingtoagencyshallapplytotherightsandduties
ofmanagers.
(2)Managersshallbejointlyandseverallyliabletothepartnersforfai.
luretocarryouttheirdutiesaccordingtolaworunderthepartner-
shipagreement.
(3)WhereliabilityhasbeenincurredandsuchliabilityisnOtdueto
thefaultofamanager,themanagershallhavearightofactionagainst
thepersonthroughwhosefaulttheliabilitywasoccasioned.
Art.242.-UJUJutharisedagency.
Whereapersonholdshimselfouttobeamanagerofapartnershipor
whereamanagerexceedshispowers,therulesrelatingtounauthori8ed
agencyshallapply.
-
Chapter4.RightsandDutiesofPartners
Art.243.-Dutiesofthepartners.
(1)Everypartnersh~,inconductingpartnershipbusiness,usethedili-
genceendskillyhichheusesinconductinghisprivateaffairs.

61. 48 COMMERCIAL CODE
(2)EverypartnershaHbeliabletotheotherpartnersinrespect.pfany
damagewhichhehascausedbyhisdefault.Anybenefitwhichhe
hasprocuredforthepartnershipinhandlingotherbusinessmaynot
besetoffagainstsuchdamage.
Art.244.-Dutytoobtain.
Nopartnermayhandle,eitherforhisownbenefitorforathirdperson,
anybusinesswhichwouldbecontraryoryrejudicialtothepartnership.
Art.245.-Useofpartnershipproperty.
(1)Froperty,debtsandrightsbroughtintooracquiredbythepartner-
.'
shipshallbelongtothepartnersincommonunderthetermsofthe
partnershipagreement.
(2)Everypartnermayusepartnershippropertyinaccordancewithusual
partnershippractice.
(3)Nopartnermayusepartnershippropertyagainsttheinterestsofthe
partnershiporsoastopreventhisco-partnersfromusingsuchpro-
pertyin.accordancewiththeirrights.
Art.246.-Necessaryexpe~.ses.
Everypartner.mayrequirehispartnerstosharesuchexpensesasmaybe
necessarytopreservethepartnershipproperty.
Art.247.-Advancesorloans.
(1)Apartnerwhomakesanadvanceoffundstothepartnershipshallhe
entitledtointerest.
(2)Apartnerwhoborrowsfundsfromthepartnershipshallpayinterest.
(3)Hemay,whereappropriate,beliabletopaydamagesinaddition
tointerest.
Art.248.-Righttocheckbooksandpapers.
Everypartnershall,notwithstandinganyprovisiontothecontraryinthe
partnershipagreement,havetherighttocheckthestateofthefirm's
business,toconsultthebooksandpapersofthepartnershipandtodraw
upastatementofthefinancialposition.
Art.249.
-
Reports.
(1)Whereapartnershipcontinuesformorethanoneyear,thepartners
mayrequireareportonthemanagementtohepreparedattheend
ofeachyear.
(2)Anyprovisioninapartnershipagreementforreportstobesubmitted
atintervalsexceedingtwelvemonthsshallheofnoeffect.

62. COMMERCIAL CoDE 49
Art.250.-Associationwiththirdparties.
(1)Nopartnermayintroduceathirdpartyasapartnerwithouttheconsent
oftheotherpartners.
(2)Whereapartnergivesaninterestinhispartnershipsharetoathird
partyorassignshissharetohim,thethirdpartydoesnotbecome
apartnerandhasnorightunderArt.248.
Art.251.-Profitsharing.
(1)Thepartnersshallshareallprofitswhich,bytheirnature,arepart-
nershipprofits.
(2)Unlessotherwiseagreed,everypartnermay
bedistributedimmediatelyafterapprovalof
requirethattheprofits
themanagementreport.
Art.252.-Mannerofdistributingprofitsandlosses.
(1)Unlessotherwiseagreed,everypartnershallhaveanequalsharein
theprofitsandlosses,irrespectiveofhis.contribution.
(2)Iftheagreementspecifieseithertheshareintheprofitsortheshare
inthelosses,thisprovisionshallapplyequallytotheshareofprofits
andlosses.
Art.253.-Distributionbyathirdparty.
(1)Wherethepartnersagreetoreferthedistributionofprofitstoone
ofthemortoathirdparty,suchdistributionmayonlybechallenged
asbeinginequitable.
(2)Noclaimshallbeentertainedwherethepartnerwhoconsidershim.
selftobeaggrivedbythedistributionhasnotchallengedluch
disributionwithinthreemonthsofhisbecomingawarethereof,or
wheresuchpartnerhasinitiatedtheexecutionofthedistribution.
Art.254.-Contributionofskill.
NotwithstandingtheprovisionsofArt.215,provisionsmaybemadetothe
effectthatapartnerwhocontributesskillonlyshallshareintheprofits
andnotinthelosses.
Chapter5.Relationsofthepartnership
withthirdparties
Art.255.-Creditorsofthepartnership.
(1)Thecreditorsofthepartnershipmayclaimagainstpartnershipassets.
(2)Theymayalsoclaimagainstthepersonalpropertyofthepartners

63. 50 COMMEaCIAL CODE
'WhosIWl,unlessotherwiseagreed,bejointlyandseverallyliableto
themfortheobligationsofthepartnership.Apartnerwhoissued
onhispenonalpropertymayrequire,asthoughhewereaguarantor,
thatthecreditorfirstdistrainthepropertyofthepartnership.
(3)Anyproviaionrelievingthepartnersorsomeofthemofjointand
8eVeralliabilityJI1!tynotbesetupagainstthirdpartiesunlessitis
showntI1.tsuchpartieswereawareo!J!'U~h-pmvisieJr.NOt~ithstand-
ingallYprovisiontothecontrary,thepartnerswhoactedinthename
ofthepartnershipshaHalwaysbejointlyandseverallyliable.
Art.256.-Personalcreditor,.
(l)Penooalcreditorsofthepartnersmayattachtheshareintheprofits
duetotheirdebtor.
(2)Theymaytakeallstepsnecessarytoprotecttheshareduetotheir
debtoruponthewinding-upofthepartnership.
(3)Uthepersonalpropertyoftheirdebtorisnotsufficienttoindem.
nifythem,,theymayrequirethat,withinthreemonthsfromthedate
oftheirdemand,thedebtor'sshareinthepartnershipbedisposedof.
Art.251.-&HfI.
Apersonwhoisadebtorofthepartnershipmaynotsetoffadebt
oneofthepartners.
~pter6.Dissolutionandwinding-upofp~ership
Art.258.-PG11IuJr,hipfor/Inundefinedperiod.
(1)1VheJeapartnershipisenteredJntoforanundefinedperiodorfor
thelifeofoneofthepartners,orwherethepowerto,dissolveon
DOtioeisPJOVidedintheagreement,everypartnermaybringabout
itadisIolutionbygivingsixmonthsnotice.
(2)NCIticetodiseoIveshallbemeningoodfai,thandnotbeunseasonable.'",
(3)NoticetodiseoIvesIWlbeI.medtobeunseasonablewherethesitua.~.
tioniaDOtdeterminedandthedissolutionof,thepartnersmpshould
hepoetponed.
Art..259.-lVitlulrGwalofIIpartner.
Whereapartnerbasgivennoticetodissolveunder~.-'2ti8,hispart.
Den11187pNVeDtdissolutionbypayingouthisshare,andthepartner-
IIiipIhallcontinueubetweentheotherpartners: '
Art.260.-DfIIII1a,ilu:t&paeityorbankruptcy.
.
(1)Aput:nenIIaipIhal1bediseolvedwhereoneofthepartnersdiesoris

64. COMMERCIAL Com: 11
DOlougerable,underthelaw,tohe.partner.
(2)A.partnershipshel1be-4iss0J:ve<lwhereapartner18deelaredIlaDbapt
orwhereoneofhispersonalcreditorscauseshisahuetohedispo8ed
ofunderArt.256(3).
(a)Thepartnershipmaybyagreementcontinue88hetweeDthewn.
ing-Partners,orwiththeheir&orreprellfJDtativeeoftheden.ell.
incapableorbankrupt-par!D.eI'.
Art.261.~Expr.tl8ionofapartner.
ThecourtmayordertheexpulsionofapartnerforgoodC8W1eandthe
partnershipshallcontinueasbetweentheJ'f!IIIR;n;ngpartners.
Art.262.-Payingoutpartnerleaving.
(1)Whereapartnerleavesapartnershipandthe~ ~
asbetweenthe.otherpartners,therightsofthe~~~ I~left
shallbesettledincash,onthebasisofthevalueofLie '.the
daywhenheleavesthepartnership.
(2)ApartnerwholeavesthepartnerShipshallshareintheJDUfiI!t8iIId
lossesarisbtgfromdealings.completoo.oroutatand:iDsOIlthed8y,..
heleaves.
.
(3)Heshallbeliabletothirdpartieeforalldeelinp priortubU
leaviug.
Art.263-PowersofmanagersafterdisMution.
(1)Themanagersshallretainondiuolutiontheirpowenuntlldaeyhaft
madearraugementsforthediuolution.
(2)Duringdissolution,theymayonltexerci8esuchpowers888Jeneoee-
sarytocompletethedissolution.
Art.264.
-
Appointmentofliquidators.
(1)Mterdissolution,thewinding-up&hallbecarriedoutbyoneormore
liquidators,appointedunderthepartn~ agreementorbyallthe
partners.
(2)Failiugtheagreementofthepartners,thecourtshall
..~
liquidators. /;/////-/_.
Art.265.
-
DutiesandresponsjJJii[tieso!Uiiuidators.
//.
(1)Unlessotherwise~~idedinthepartneI'Shipagreementorbytaw,
theliquidat~ll hayetheaamedutiesandreIpOII8ihilitiee88
-- ~.-DlJUl8fJ.U'!V
/

65. S2
COMMERCIA.L CODE
(2)Theappointmentofliquidatorsmayherevokedbythedecision
0'
allthepartners,orbythecourtattherequestofonepartner.
..
Art.266.-Inventory.
(1)Themanagersshallhandovertotheliquidatorsthepropertyof,and
documentsrelatingto,.thepartnershipandrenderanaccountoftheir
managementuptothedateofhandingover.
(2)Theliquidatorsshalldrawupaninventoryoftheassetsandliabilitiea
ofthepartnership
.1
~.,
.~f~
~
,,
Art.267.-PowersoftMliquidators.
(1)TheliquidatorsshalItakeallstepsnecessarytocompletethewind.
ing-upofthepartnership.
(2)Theliquidatorsmaysellthepropertyofthepartnership,represent
thepartnershipinlegalproceedingsandmaycompromiseorrefer
toarbitrationanymattersinissue.
(II)Theliquidatorsmaynotundertakenewbusinessinthenameof
partnershipbutmaycompletebusinessalreadystarted.
Art.268.-Settlem.entwithcreditors.
(1)Theliquidatorsshallpaythecreditorsofthepartnership,wherene-
cessarycallinguponthepartnersforcontributions.
(2)They8ha1lsettlewiththepartnersdebtswhichtheyholdagainstthe
partnershipandrestoretopartnerspropertywhoseuseonlywas
contributedtothepartnership.
Art.269.-Restitutionofcontributions.
(1)Apartnerwhohascontributedpropertymaynotclaimitbackin
kind.
(2)Heahallhaveaclaimtothevalueofhiscontributionasacceptedin
thepartnership'saccounts.
(II)Ifthevaluehas",otheensofixed,restitutionshall.hemadeonthe
basisoftheactualvalueatthetimethecontributionwasmade.
Art.270.-Distributionofprofitsandlosses.
(1)Wherethereisasurplusafterallclaimshaveheen:metandcontri-
butionsreturned,thesurplusshallhedistributedamongthepartners.

66. COMMERCIAL CODE 53
(2)Wheretheassetsareinsufficienttorepaycontributionsafterpay-
mentofdebts,expensesandadvances,thelossshallbedistributed
amongthepartners.
(3)ThedistributionofprofitsandlossesistobemadeaDlongthepart-
nersinequalshares,wherenootherproportionhasbeenspecifiedin
thepartnership'agreement.
TITLEfiI.JOINTVENTURE
Art.271.-Definition.
Ajointventureisanagreementbetweenpartnersontermsmutually
agreedandissubjecttothegeneralprinciplesoflawrelatingtopart-
nerships.
Art.272.-Absenceofdivulgation.
(1)Ajointventureisnotmadeknowntothirdparties.
(2)Ajointventureagreementneednotbeinwritingandisnotsubject
.toregistration_dotherformsofpublicationrequiredinrespectof
otherbusinessorganisations.
(3)AjointventuredoesnothaveJegal'personality.
(4)Whereajoint,venture,ismadeknowntothirdparties,
.deemed,insofarassuch'partiesM'econcerned,tobean
nership.
Art.273.-Contributions.
Unlessotherwiseprovided,everypartnerownshiscontribution.
Art.274.-Shares.
(1)Ajointventuremaynotissuenegotiablesecurities.
(2)Unlessothewiseprovided,sharesmaybeassignedonlywiththe
.
a~eementofallthepart~ers.
Art.275.
-
Management.
(1)Ajointventureshallbemanagedbyoneormoremanagers,who
neednotbepartners. ,
(2)Wherenomangerisappointed,allthepartnersshallhavethestatus
ofmanagers.
.
(3)Theappointmentofapartnerasmanagermaynotberevokedwith-
outgoodCa11se.
(4)Thepowersofthemanagershallbespecifiedinthememorandumof
association.Theprovisionsrelatingtothesepowersmaynotbeset
upagainstthirdparties.
Art.276.-Partnerswhoarenotmanagers.
(1)Themanagerisknowntothirdparties.Heshall'befullyresponsible
itshallbe
actualpart-

67. SA. COMMERCIAL CODE
fortheHabUitiesofthejointventure.
(:I)P8Z't1M1:8who81'enotmanagersshallmeetliabilitiesonlytothe
atentfixedinthememorandumofassociation.
(3)Thepetne.rsmaysupervisetheworkofthemanage~.
(4)Inacommercialjointventure,partnerswhoarenotmanagersand
'whotalepartinthemanagementshallbejointlyandseverallyliable
asbetweenthemselv~andwiththemanager.
(5)E'VWypartnershalldealwiththirdpartiesinhisownname.
Art.277.-DutytoClCoount.
Amanagershallaccounttothepartners.Anyprovisionrelievinghim
fromthisdutyshallbeofnoeffect.
Art.278.-Groundsfordissolution.
(1)Ajointventuremaybedissolvedononeofthefollowinggrounds:
(a)theexpiryofthetermfixedbythememorandumofassociation,
uni-thereisprovisionforitsextension;
(b)thecompletionoftheventure;
(c)failureofthepurposeorimpossibilityofperformance;
(d)adecisionofallthepartnersfordissolutiontakenatanytime;
(e)arequestfordissolutionbyonepartner,wherenofixedtermhas
beenepecified;
(f)dissolutionbythecourtforgoodcauseattherequestofone
partner;
(g)theacquisitionbyonepartnerofalltheshares;
(h)death,bankruptcyorincapacityofapartner,unlessotherwise
lawfullyagreed;
.
(i)adecisionof,themanager,ifsuchpowerisconferreduponhimin
thememorandumofassociation.
(2)TheprovisionsofthisArticle'shallapplynotwithstandinganypro-
visiontothecontraryinthememorandumofassociation.
Art.279.-Expulsionofapartner.
(1)Wheredissolutionisrequestedforreasonsattributabletoonepartner,
thecourtmay,ontheapplication,.of1be--otherpartners,orderthe
expulsionofthepartneratfaulHnlieuofdissolution.
(2)Thememorandumofassociationmayprovideforexpulsion.
(3)Apartnerwhoisexpelledshallbepaidwhatisduetohimonthe
dayofexpu1sion.

68. COMMERCIAL CODE 55
TITLEIV.GENERALPARTNERSmp
Art.280.
-
Natureofgeneralpartnership.
(l)Ageneralpartnershipconsistsofpartnerswhoarepersonally,joint.
ly,severallyandfullyliableasbetweenthemselvesandtothepart.
nershipforthepartnershipfirm'sundertakings.Anyprovisionto-the
contraryinthepartnershipagreementshallbeofnoeffectwithre-
gardtothirdparties.
(2)Wherethepartnershipisacommercialpartnership,eachpartnershall
havethestatusofatrader.
(3)Thepartnershipshallhaveafirm-name.
(4)TheprovisionsofAft.'282shallapplywherepartnershipsharesare
assignedortransferred.
Art.281.-Firm-name.
(I)Thefirm-nameshallconsistofthenamesofatleasttwoofthepart-
nersfollowedbythewords"Generalpartnership,"andmaynotcon-
tainnamesofpersonswhoarenotpartners.
(2)Whereapartnerwhoismentionedinthefirm-nameceasestobea
partner,thefirm-nameshallbechangedaccordingly.
(3)Whereapersonnotbeingapartnerpermitshisnametobeused
inthefirm-name,heshallbeliableasafullpartner.
Art.282.-Rulesconcerningshares.
(1)Asharemaybeassignedortransferred~hereallthepartnersagree.
(2)Thememorandum ofassociationmayprovidethatapprovalshallbe
givenbyamajorityofthepartners.
(3)Unlessthefirm'screditorsagree,apartnerwhohasassignedhisshare
shallbeliableforthefirm'sdebtsuptothedateofassitpunent.
Art.283.-Grantingofbeneficialinterestinsharetothirdparty.
(I)Apartnermaywithoutapprovalgranttoathirdpartythebeneficial
rightsandinterestsinhisshare.
(2)Suchgrantshallnotbindthepartnership.
(3)Thethirdpartyhasnoneoftherightsofapartner.
Art.284.-Memorandumofassociation.
Thememorandumofassociationshallbedrawnupbythepartners.Itaha1l
contain: .
(1)thename,addressandnationalityofeachpartner;

69. 56 COMMERCIAL CODE
(2)thefirm-name;
(3)theheadofficeandbranches,ifany;
(4)thebusinesspurposesofthefirm;
(5)thecontributionsofeachpartner..theirvalueandthemethodofvalua.
tion;
(6)theservicesrequiredf:rompersonscontributingskill;
(7)theshareofeachpartnerintheprofitsandinthelossesandtheagreed
procedureforallocation;
(8)themanagersandagentsofthefirm;
(9)theperiodoftimeforwhichthepartnershiphasbeenestablished.
Art.285.-Publicationofnoticeandregistration..
(1)AnoticepublishedunderArt.219(2)(a)and220shallcontainthe
particularsspecifiedinArt.284(1)
-
(6),(8)and(9).
(2)Thesameparticularsshallappearontheapplicationforregistration
inthecommereialregister.Theapplicationshallbesignedbythe
managerorapersonactingonhisbehalf.
Art.286.-Undertakinl!sofpartnership.
Thepartnershipmayacquirerightsandliabilitiesandsueorbesued
UDderitsfirm.name.
Art.287.-Administrationofpartnership.
(!)/l'hepartnershipshaHbeadministeredbyoneormoremanagerswho
mayormaynotbepartners.
(2)Wherenomanagerisappointed,eachpartnershallbeamanager.
Art.288.-More thanonemanager.
(1)Whereallthepartnersaremanagers,orwhereseveralpersonshave
beenappointedmanagersandtheirdutieshavenotbeenspecified,
orithas
.~
beenspecifiedthattheyactjointly,theymayeachcarry
outactsofmanagement.
(2)Wherethememorandum providesfortheseparationofdutiesofthe
mangers,suchseparationshallonlyaffectthirdparties.whereithas
beenenteredinthecommercialregisterorifitisshownthatthe
thirdpartieswereawareofsuchseparation.
(3)Each.manage.mayobjecttodealingscontemplatedbyotherm.anagers.
Suchobjectionshallbedecidedonbyamajorityvoteofall
thepartners.

70. C~MMERC.AL COBE
5'1
Art.289.-Scope0/duties0/maTWgers.
(1)Managersmay,ibaceordaaeewiththelaw,actforand.bindtheirfim...
(2)Anyprovisionsres,trictingtheextent.ofthl'SCpowersshallonlyaffeet
thirdpartieshwheresuchproviaionjjhaveheenenteredinthecom.
mercialregisterorifitissho).Vnthatthethndpartieswereaware
ofsuchprovisions.
Art.290-Manager'sexerciseo/powers.
(1)Whereamanageractsinthefirm-namefbrhisownprofit,thepart.
nership.shallbeFabletotbirdplirtiesingoodfaith.Whereitis
shownbythefirmthatthethirdpartywlIfawareoftheimproper
useofthefirm-namebythemanager,themanageraloneshallbe
liable.
(2)Whereamana,gerdeaJt.withafhirdpartywitlwutusingW.firm.
name,heshallbe~JUedto.have8C1~.onhisownbehal(.Thefirm
shallbeliablewherethethirdpartycanshowthatthemanagerWill!
transactingbusinessforthefirm.
(3)AmanagerwhoMaroutsidethescopeof'hisemploymentaballuone
beliable.
.
Art.291.-Dealingsu,iththepartnership.
Exceptwiththespeeialapprovalofthepartners,amanagermaynOthaft
dealingswiththefirmonhisownbehalf.
Art.292.
-
Restrictionsonprivatetrade.
(1)Unlessotherwiseagreed,nopartnermaycarryouttransactionsonbehalf
ofatIfudpart,..oronhisownbehalfwhichrelatetobusinCIIIcarried
onbyhisfirm,normayhebeapartnerwithjointandseveralliability
inthemanagementofafirmcarrying011similarbusinCIII.
(2)Avunlimitedagreementundersub-article(1)shallbevalidfor0118
yearonly.
Art.293.-Dis~issalofmanager.
(I)Amanagerappointed.inthememorandumofauoeiationorfollowing
anamendmentofthememorandummayonlybedismissedbythe
courtforgoodcause.
(2)Amanagernotappointedasprovidedinsub-art.(1)maybefreely
dismissedbythepartners.

71. 58 COMMERCIAL CODE
Art.294.-Liabilityofpartners.
Noactionmayhetakenagainstindividualpartnersfordebtsduebythe
partnershipuntilafterpaymenthasbeendemandedfromthepartnership:
Providedthatauactionfortherepaymentoffictitiousdividendsmay
hebroughtdirectlyagainstindividualpartners.
Art.295.-Otherprovisionsapplicable.
TheprovisionsofArt.227-23-2,233(1),235,248,249,258,260,267.270
ofthisCodeshallapplytogeneralpartnerships.
TITLEV.LIMITEDPARTNERSHIP
Art.296.-Natureoflimitedpartnership.
Alimitedpartnershipcomprisestwotypesofpartners:generalpartners
infullliablepersonally,jointlyandseverallyandlimitedpartnerswho
areonlyliabletotheextentoftheircontributions.
Art.297.-Firm-name.
(1)Alimitedpartnershipshallhaveafirm-name.
(2)ThisnameshallcOllsistofthenamesofthegeneralpartners,with
thewords"LimitedPartnership"added.
(3)Wherealimitedpartnerallowshisnametoheincludedinthefirm-
n~~,heshallheliabletothirdpartiesingoodfaithasthoughhe
wereageneralpartner.
Art.298.-Memorandumofassociation.
Thememorandum ofassociationshallcontaintheparticularsrequiredby
,Art.284andparticularsshowingwhoaregeneralorlimitedpartners.
Art.299.-Publicationofnoticeandregistration.
(1)AnoticepublishedunderArt.219(2)(a)and220shallcontainthe
particularsspecifiedinArt.284(1).(6),(8)and(9)and298.
(2)Thesameparticularsshallappearontheapplicationforregistration
inthecommercialregister.Theapplication>shallbesignedbythe
managerorapersonactingonhisbehalf.
Art.300.-Generalpartners.
Thegeneralpartnersinalimitedpartnershipshallhavethesamerights
andobligationsaspartnersinageneralpartnershipandonlytheymaybe
appointedmanagers.

72. COMMERCIAL CODE 59
Art.00.1.-Limitedpartners.
(1)Actionmaybetakenbyafirm'screditortocompellimitedpartners
tosubscribetheircontribution.
(2)Limitedpartnersneednotrepaydividendsreceivedbythemingood
faithafterapprovalofthefirm'sbalancesheet.
(8)Limitedpartnersmaynotactasmanaprsevenunderapowerof
attorney.Alimitedpartnerwhocontravenesthisrule8hanbefully
jointlyandseverallyliableforanyliabiliti81ariaingoutofhi.activities.
Wher~appropriate,hemayhedeclaredjointlyandIIIverallyliablein
~t of.IOmeorallthefirm'sundertakings.
(4)Alimitedpartnershallnothedeemedtoactasmanagerwhenhe:
(a)consultswithotherpartners;
(b)dealswiththefirm;
(c)investigatesmanagerialacts;
(d)givesadviceandcounseltothefirm;
(e)givespermissiontodoactsoutsidethemanager'spowers.
(5)Limitedpartnersmayheemployedinthefirmandbindthemselves
bycontractsofemployment.
(6)Limitedpartnersmayinspectthebooksofthefirmandmaycallfor
theaccounts.
(7)Unlessotherwiseagreed,nothingaffectingalimitedpartnershallbea
groundfordissolution.
Art.302.-Assignmentofshares.
Sharesmaynotheassignedexceptwith.theagreementofthemanagersand
themajorityofthelimitedpartners.
Art.303.
-
Otherprovisionsapplicable.
WithoutprejudicetotheprovisionsoftheprecedingArticles,theprovisions
ofArt.227.232,233(1),235,248,249,258,260,262.27'0,282,283,286.
291,293and294shallapplytolimietdpartnerships.
TITLEVI.COMPANffiSI.IMITEDBYSHARES
Chapter1.GeneralProvisions
Art.304.-Definitionofsharecomprmy.
(1)AsharecompanyisacompanywhosecapitaJ.isfixedinadvanceand
dividedintosharesandwhoseliabilitiesaremetonlybytheassetsof
thecompany.

73. 60
COMMERCIAL CODE
(2)ThemembersshallbeliableonlytotheextentoftheirshareholdiDg.
Art.3'05.-Companyname.
Thecompanynameshallbeasagreedbutshallnot.offendpublicpolicynor
therightsofthirdpartiesandshallincludethewords"Sharecompany."
Art.3Q6.-
Minimumamountofcapitalandanominalvalueofshares.
(1)Thecapitalshallnotbelessthan501000Ethiopiandollars.
(2)Theamountoftheparvalueofeachshareshallnotbelessthan10
(ten)Ethiopiandollars.
Art.307.
-
Founcrers.
(1)Acompanymaynotbeestablishedbylessthanfivemembers.
(2)Personswhosignthememorandum ofassociationandsubscribethe
wholeofthecapitalshallhavethelegalstatusoffounders.
(3)Whereacompanyistobeformedbytheissueofsharestothepublic,
personswhosigntheprospectus,bringincontributionsinkindorare
tobeallocatedaspecialshareintheprofits,shallhavethestatusof
foundeD.
(4)Anyperson,eventhoughoutsidethecompany,whohasinitiatedplans
orfacilitatedtheformationofthecompar:.y,shallhavethestatusofa
founder. "
Art.30B.-Commitmentsenteredintobythefoundersofthecomptmy.
(1)Thefoundersshallbefullyjointlyandseverallyliabletothird.parties
inrespectofcommitmentsenteredintofortheformationofthecom.
pany.Allpersonswhohaveactedinthenameofthecompanybefore
itsregistrationinthecommercialregistershallbesimilarlyliable.
(2)Thecompanyshantakeoverthesecommitinentsfromthefoundersand
refundthefounderswithallth~expe~madebytheminsofarassuch
commitmentsandexpenseswerenecessaryfortheformationofthe
companyorapprovedbythegeneralmeetingofthesubscribel'B.
(3)Wherethecompanyisnotes~lishedforwhateverreason,thesub-
scribersshallnotbeliableforthecommitmentsorexpensesmadeby
thefounders.

74. COMMERCIAL £ODB 61
Art.
3{)9;-Liabilityofthefounders.
(1)Thefoundersshallbejointlyandseverallyliabletotheeompanl'and
thirdpartiesforanydamageinconnectionwith:
(a)thesubscriptionofthecapitalandthepayments~f.r the
formationofthecompany;
(b)contributionsinkindasprovidedunderArt.315;
(c)theaccuracyofstatementsmadetothepublicinrespectofthe
formationoftheco~pany.
(2)ClaimsfordamagesunderthisArticleshallbebarredafterfive.yean
fromthedatewhentheaggrievedpartyknewofthedanaageandofthf
personliable.Thereshallbeabsolutelimitationaftertenyearsfroll'
thedatewhentheactcomplainedoftookplace.
(3)NothinginthisArticleshallaffectcaseswheretheliabilityofthe
foundersarisesfromthecommissionofacriminaloffence.
Art.316.
-
Limitofprofitswhichmaybeallocatedtothefounders./
(1)Thefoundersmay,foraperiodnotexceedingthreeyears,~rveper-
sonallytothemselvesinthememorandumofassociationandioaddition
totheirrightsasshareholders,asharewhichshallnotexceedonefifth
ofthenetprofitsinthebalancesheet.
(2)Nootheradvantdgetofoundersmaybeprovidedinthememora,adum
ofassociation.
(3)
T'hebenefitsprovidedbythisArticlearepel1!Onaltothefoundersbut
nofoundersharesmaybeissued.
Art.311.-MembersrPtlucedinnumberbelowthelegalminimum.
(1)Noeompanyshallremaininbusinessformorethansixmonths.after
thenumberofmembersisreducedtolessthanfive.Everymemller
awareofsuchreductionshallbepersonallyliableforthedebts.eontrAC-
tedthereafter.
(2)Wherethemembersarelessthanfiveinnumberorthecompanydoes
notpossesstheprescribedorgans,thecourtmayorderthewinding-up
ofwchcompanyontheapplicationofamemberorcreditor.Theeourt
mayadjournitsdecisionuponsuchtermasitthinksfittopermitof
thereorganisationofthecompanyandordersucheonservatorymeasu-
resasmaybenecessary,
Chapter2.Fonnationofthecompany
It.312.
-
Generalrequirementsinrespectofformation.
(1)AshareCOJDpIUlyshallnotheJI)1'D1ettuntil:
(a).thecapitalhuheeDfuDy.uheeribed;

75. 62 COMMERCtAL CODE
(b)onequarteratleastoftheparvalueoftheshareshasbeenpaid
upanddepositedinabank,inthenameandtotheaccountof
thecompany.
(2)Sumsdepositedundersub-art.(1)shallnotbepaidovertothelegal
representativesofthecompanyuntilregistrationinthecommercial
registerhasbeeneffected.
(3)Whereregistrationhasnotbeeneffectedwithinoneyearfromdeposit
inabl1nk,thesumsdepositedshallberepaid-tothelIuhscrWel'B.Such
repaymentshallbeeffectedbythefounderswhoshallbejointlyand
severallyliable.Afteroneyearsuchsumsshallbearinterestatthe
legalrate.
Art.313.-Memorandumofassociation.
Theformationofacompanyshallbebypublicmemorandumwhichshall
contain:
(1)thenames,nationalityandaddressofthemembers,thenumberof
shareswhichtheyhavesubscribed,providedthatamembermaynot
subscribelessthanoneshare;
(2)thenameofthecompany;
(3)theheadoffice,andthebranches,ifany;
(4)thebusinesspurposesofthecompany;
(5)theamountofcapitalsubscribedandpaidup;
(6)theparvalue,number,formandclassesofshares;
(7)thevalueofcontributionsinkind,theirobject,theprice.atwhich
theyareaccepted,thedesignationoftheshareholderandthenumber
ofsharesallocatedtohimbywayofexohange;
(8)themannerofdistributingprofits;
(9)anyshareintheprofitsallocatedtothe,foundersandreasonsforsuch
share;
(10)
th"
numberofdirectorsandtheirpowersandtheagentsofthecom-
pany;
(11)theauditors;
(12)theperiodoftimeforwhichthecompanyistobeestablished;
(13)themannerinwhichthecompanywillpublishitsreports.
Art.314.-Articlesofassociation.
(1)Thearticlesofassociationwhichgoverntheoperationofthecompany
shallbedrawnupbythefoundersinaccordancewiththelaw.

76. COMMERCIAL CODE 63
(2)ArticlesofassociationmayfollowthemodelsuppliedbytheMinistryof
CommerceandIndustrywithanynecessarymodifications.
(3)Articlesofassociationshallbedeemedtoform.partofthememorandum
ofassociationandshallbeattachedthereto.
Art.815.-Valuationofcontributioruinkind.
(1)Amemberwhomakesacontributioninkindshallfileareportmade
andswornbyexpertsappointedbytheMinistryofCommeroeandIn-
dustry.
.
(2)Thereportshallcontainadetaileddescriptionofthepropertycontri.
buted,thevaluegiventoeachitemandthemethodofvaluation.Itshall
beannexedtothememorandumofassociation.
(3)Withinsixmonthsfromthedateofformationofthecompanythedi.
rectorsandauditorsshallverifyand,wherenecessary,reviewtheva-
luationgiveninthereport.Thesharesrepresentingcontributionsin
kindshallremaindepositedwiththecompanyandmaynotbeassign-
eduntilthevaluationhasbeenverified.
(4)Whereverificationundersub-art.(3)resultsinthevalueofthecon-
tributionbeingloweredbyonefifth,thevalueofthecapitalshallbe
reducedaccordingly:providedthatthecontributormaymakegoodthe
differenceorshallwithdrawfromthecompany.
(5)Theprovisionsofsub.art.(3)and(4)shallapplynotwithstanding
approvalhavingbeengiventothereportundel:,sub-art.(1)byage-
neralmeetingofthesubscribers.
Art.316.-Formationasbetweenfounders.
Wheresharesarenotofferedforpublicsubscription,thefoundersshall
showinthememorandumofassociation:
(1)thatalltheshareshavebeenallocated;
(2)thatthesumshavebeendepositedinthemannerrequiredbyArt.312
(1)(b);
(3)thattheprovisionsofArt.315havebeenappliedtocontributionsin
kind;
(4)thattheyhaveprovidedfortheadministrativeorgansofthecompany.
Art.317.-Formationbypublicsubscription.
Whereacompanyisformedbypublicsubscription,theprovisionsofArt.
318-322shallapply.
,/
r

77. 64 COMl\IE'CIAL.CODE
Art.318.
-
Prospectus.
(1)Anoffertosubscribersshallbemadebyaprospectussignedbyallthe
foundersandshallcontain:
(a)thetextofthedraftmemorandumofassociation;
(b)asummaryoftheprincipalprovisionsofthearticlesofassociation;
(c)asummaryoftheexpertreportunderArt.315,ifany;
(d)thedateuntilwhenthesubscribersmayberequiredtodischarge
.-~
theirobligations;
(e)thepriceatwhichsharesaretobeissued;
(f)theamounttobepaiduponthesharesuntilthegeneralmeeting
ofthesubscribers;
(g)theplace~'hereapplicationsandpaymentsshallbemade.
(2)Copiesoftheprospectusandoftheexpertreportshallbemadeavail.
abletoallpersonswhomaywishtosubscribe.
Art.319.-Applicationforshares.
(1)Applicationsforsharesshallbcmadeontheformprovidedandde-
positedintheplaceofapplication.
(2)
'TheapplicantforsharesstIalldeclarethathehasreadtheprospectus
andtheexpertreport,ifany.Heshallstateontheformhisnameand
address,thenumberofsharesappliedforandthedateofapplication.
Art.320.-Meetingofsubscribers.
(1)Whenthetimeformilkingapplicationshasexpired,thefoundersshall
callameetingofthesubscribers.
(2)Theprovisionsrelatingtothecallinganddecisionsofanextraordinary
generalmeetingshallapplytomeetingsofsubscribers,withoutpreju.
dicetotheprovisionsofArt.322.
Art.321.-Purposeofthemeeting.
ThepurposeofthemeetingunderArt.320shallbe:
(1)toverifythattherequirementsrelatingtotheformationofthecom.
panyhavebeencompliedwith;
(2)todrawupthefinaltextofthememorandumandarticlesofaSSOciation;
(3)toapprovecontributionsinkind,ifany,andthesha~.intheprofits
allocatedtothefounders;

78. COMMERCIAL CODE 65
(41)tomU.eallappointmentsrequiredunderthememorandumofUBOcia-
tkm.
/
- /
Art.322.
-
SpecialrulesregardUJ-grudlution$,ofthemeeting.
(1)ReIfOlutionsofs~' meetingsshallbedrawnupandsignedby
thefoundersandI1Iidocumentssubmittedtothemeetitlgshallbean-
nexedthereto.-/
(2)Any
-~
maytakepartinthediscussionsatthemeetingand
mayex9Cisehisvotingrightsunderthearticle.qofassociation.
(3)Fo~ersmaynotvOteintheircapacityofshm-eholdersorproxieson
,theresolutionapprovingtheirspecialshareintheprofits.Thesame
shallapplytocontributorsinkindasregardstheresolutionapproving
thevaluationoftheircontributionSinkind.
(4)Amendmentsofsubstancetothedraftmemorandumandarticlesof
associationrequiretheapprovalofallsubscribers.
Providedthatamajorityvoteshallbesufficientwheretheamen-
dmentsrelatetoapprovalofcontributionsinkindorapprovalofshares
allocaredtothefounders.
(5)TheprovisionsofArt.315(4)shallapplywherethemeetingredu.
cesthenumberofsharesallocatedtocontributorsinkind.
Art.3'23'j-IJ~pogj,t
ofthememorandumofassociationandregistrationinthe
com~ register.
(1)TheprovisionsofArt.219-224oft:haCode1ili.allapplyregardlessofthe
mannerinwhichthecompanywasformed.
(2)Thefollowingdocumentsshallbedeposited:
(a)thememorandumofassociation;
(b)thearticlesofassociation,ifany;
(c)theprospectus;
,
(d)theminutesofthesubscribeis'm~g andallcomplemen-
tarydocuments.
(3)Thenoticetobepublishedandtheapplicationforregistrationshall
containtheparticularsspeci1iedinAn.313(1).(7)and(1<0)-
(12).
Art.324.-Effectofpublicity.
(1)Wherepublicationandregistrationhavebeenmade,thecompany
shallhavealegalexistenceIi11dpersorlalitynotwithstandingthatall
thelegatrequirementsrelatingtotheformationofthecompanyhave
notbeencompliedwith.

79. 66 COMMERCIAL CODE
(2)Wheretheinterestsofcreditorsorshareholdersareendangeredbythe
legaJ.orstatutoryrequirementsnothavingbeencompliedwith,the
courtmay,ontheapplicationofanysuchcreditororshareholder,or-
derthediI8O'lutionof.thecompanyandsuchprovisionaJ.measuresas
maybeneceeary.
(8)AnappUoationnotmadewithinthreemontbtfromthedateofpu.
bUoationintheOffioialCommeroialGaette.haIlnOtbeoontidered.
Chapter3.Sharesandtherightsanddutiesofshareholders
Art.825.-Formof.ha,..,.
(1)Share8areeitherregilteredinthenameOftheshareholderortobearer,
asrequiredbythe8hareholder.
(2)SharesshaIIberegisteredinthenameoftheshareholderwherebearer
maresareprohibitedbylaw,thememorandumorarticlesoflI88OCia~n.
(3)Wherebearersharesarenotprohibited,anyshareholdermaynotwillh.
standinganyprovisiontothecontraryconverthisbearersharesintore-
gisteredsharesandviceversa.
Art.326.-PriceatwhichshareslUued.
(1)Sharesmaynotbeissuedatapricelowerthantheirparvalue.
(2)SharesmaybeissuedatapricegreaterlIhanlIheirparvaluewhere
su.ohissuei8providedbythemeflI1(Jf1'8DJdiumor8I1'Iliiciesofassociationor
decidedbyanextraordinarygenC1.'almeeting.Thedifferencebetween
theparvalueandthepriceatwhichsharesareissuedshl\1l"beknown
asapremium.
.
Art.327.-Shmesissuedbeforeregistrationofthecompanyinthecommercial
register.
S~ issuedbeforetheregistrationofthecompanyinthecommercialre-
giStershalIbenullandvoid,butliabilitiesarisingth~unaershallnotbe
affected.
Art.328.
--Indivilibilityofshares.
(1)Sharesareindivisible.
(2)WhereseveraIpersonsh~1d&baresjointly,theyshaIIappointarepro-
BCn",tivetoexezciseI!heshareholder'srights.
(3)Failingsuchappointment,noticesanddeclarationsmade~ythecom.
panytoonejointownershallbeeffectiveagainstalljointowners.

80. COMMERCIAL CODE 67
(4)Jointownersofashares'ballhejointlyandsever&Jilyliableinrespectof
anyliabilitiesasshareholder.
Art.329.-Pkdgeorusufruct.
(1)Whereashareispledgedorsubjecttoausufruct,therighttovoteat
meetingsshall,unlessotherwiseagreed,heexercisedbythepledgeeor
usufructuary.
(2)Wherethereisapreferentialrightsubscription,suchrightshallhe
retainedbytheshareholder.Iftherightisnotexercised,itshallhesold
onbehalfoftheshareholderasprovidedinArt.342.
(3)Theshareholdershallbeliableforcallij..onshareswhichhavebeen
pledged.Ifthecallsarenotmet,thepledgeemayselltheshareunder
Art.342.
(4)Ausufructuaryshallheliableforcallsonsharesbutmayclaimfor
repaymentwhentheusufructexpires.
Art.33=0.-Indicationsonshares.
Everyshareshallhesignedbyadirectorandshallshow:
(a)thename,headofficeandperiodforwhichthecompanyisestablished;
(b)theamountofcapitalandtheparvalueoftheshare;
(c)thedateofthememorandumofassociationandofregistrationofthe
companyinthecommercialregister,andtheplaceofregistration;
(d)theserialnumberoftheshare,i~seriesorclass,whetheritisordinary
OTpreferentialandthekindofprefejreJlJCeshare;
(e)theamountofpartpaymentsonsharesnotfullypaidup,orastate-
mentthattheshareisfullypaidup;
(f)astatementshowingwhetherasharemayhetransferredtoaforeigner.
Art.331.-Registerofsharehaldms.
(1)Everysharecompanyshallkeepatitsheadofficearegisterofshare-
holders.
(2)Theregistershallcontainthenamesandaddressesofshareholders,the
numberandnumerationoftheshares,th,eamountpaidupandthe
dateofentryoftheshareholderintheregister.
(3)Theregistermaybeinspectedbyanyshareholderwithoutcharge;it
mayalsobeinspectedbyanyotherpersonuponpaymentofthepres-
cribedfee.

81. 68 COMMERCIAL CODE
(4)Anypersonmaywithinonemonthobtainacopyoforanextract
fromtheregisteruponpaymentoftheprescribedfee.
(5)TheMinistryofCommerceandIndustrymay,ontherequestofany
interestedpartyorpartnerorofthecompanyitself,'ordertherectifi.
cationoftheregister,wherean"rrorhasoccurred.
Att.332.-Purchasebythecompanyofitsownshares.
(1)Acompanymayacquireitsownshareswhere:
(a)theacquisitionhasbeenauthorisedbyameetingof'theshare.
holders;and
(b)thepurchasepriceismadefromthenetprofitsofthecompany;
and
(c)thesharesaretullypaid.
(2)Thedirectorsmaynotdisposeofsharesthuspurchasedandthevot.
ingrightsonsuchsharesshallbesuspended.
(3)Theprovisionsofsub-art..(1)shallnotapplywheret11epurchase
hasbeendecidedbyanextraordinarygeneralmeetingtoreducethe
capital.
(4)TheprovisionsofthisArticleshallapplywhereacompanyreceives
itsownsharesinpledge.
Art.333.-Restrictiononfreetransferofshares.
(1)Provisionsmaybemadeinthearticlesofassociationorbyresolution
ofanextraordinarymeetingrestrictingthefreetra~ferofshares.
(2)Provisionsmaybemadefortheassignmentofshareswiththecon.
sentoftheboardofdirectors.Suchprovisionsshallbeofnoeffect
unless:
(a)arightofpre-emptionisreservedtothecompanyor,theshare.
holders;and
(b)theconditionsrelatingtotheexerciseoftherightofpre-emp'
tionarespecifiedandthepriceofpre-emptionisfixed.
(3)Theseprovisionsmaynotresultinpreventingassignmentofshares
norincausingseriousdamagetoashareholderwho.maywishto
assignhisshares.
(4)Wherethepre-emptiverightisreservedtothecompany,theprice
shallbepaidfromreservefunds.
Art.334.-CompanysluJlnotgrantadvancesnormakeloansonitsshares.
Acompant"shallnotgrantadvancesonitsownshares,normakeloans
toenablethirdjt8rtie.toacquireshares.

82. COMMEBCIAL CODE 69
Art.335.-Classesof,hares.
(1)ThememorandumofauociationoranlIJI18DdJpttheretobyapo
neralmeetingmayprovidfIforthesetting.upofeeveralclu8e8of
shareswithdifferentrights.
(2)AllsharesofthelI8D1eclaasshallhavethelI8D1eparvalueandthe
samerights.
(3)Nochangeintherightsconferredtoaclassofshareemaybemade
unlessameetingoftheclassofshareholdershasagreedunderthe
sameconditionsasthegeneralmeetinghavingrecommeudedthe
change.
Art.336.-Preference,hares.
(1)Asharecompanymaycreatepreferenceshareseitherinthemem0-
randumofassociationorbyresolutionofanextraordinarygeneral
meeting.Suchsharesenjoy.apreferenceoverothershares,111masa
preferredrightofsubscriptionintheeventoffutureissues,orrights
ofpriorityoverprofits,qrassetsorboth.
(~)Theissueofshareswi~apreferenceastovotingrightsisptohibited.
(3)NotwithstandingtheprovisionsofArt.345(3),thememorandumof
associationmayprovidethatshareholderswhohavebeengivenripI8
ofpriorityoverprofitsanddistributionofcapitalupondissolutionof
thecompanymayvoteonlyonmatterswhichconcernextraordinary
meetings.
(4)Thenumberofshareshavingrestrictedvotingrighttundersub-art.
(3)maynotexceedhalftheamountofcapital.
Art.337.-Dividendshores.
(1)Acompanymayrepay,fromprofitsorreservefunds,withoutreduc-
ingthecapital,toshareholderstheparvalueoftheirshares.
(2)ShareholderswhosesharesarethWi.redeeJJMld.shall
.
receivedividend
shares(actionsdejouiuance).Tiheeesharesdonotconferanyright
tothatpartofthedividendrepresentingthestatutoryinterest,norto
repaymentofcontributionsuponthedissolutionofthecompany.They
retainhoweverarightof.vote,unlessotherwiseprovidedintheme-
morandumof888OCiation,arighttothatpartofthedividendexceed.
ingthestatutoryinterestandarighttodistributionofashareofthe
smplusinthewinding.up.
Art.338.-Payingupofcask,hares.
~
1)SharessubscribedincashshaIIbepaidupuponsubscriptionastoone

83. 70 COMMERCIAL CODE
fourthoftheirparvalueoragreateramountifsoprovidedinthe
memorandumofassociationand,whereappropriate,astothewholeof
thepremium.Theymayonlyberegisteredsharesuntiltheyarefully
paid.
(2)Paymentofthebalancemaybespreadoveraperiodoffiveyearsfrom
thedateofregistrationofthecompany.
(3)Whereshareshavebeenissuedbyexistingcompaniesbeforethecom-
ingintoforceof'thisCode,theperiodoffiveyearsshallrunfrom
thedateofcomingintoforce.
Art.339.
-
Payingupofsharesbywayofcontribution.
(1)Sharesrepresentingcontributionsinkindshallnormallybefullypaid
at.thetimeofformationofthecompanyandnotlaterthanthedayof
registrationofthecompany.
(2)Theymaynotbeseparatedfromthecounterfoilandbenegotiatedbe-
foretwoyearsfromregistration.
Art.340.-Assignmentofshares.
(1)Beareisharesareassignedby'delivery,withoutanyotherrequireme!lt.
(2)Unlessthecountryisproved,suchsharesshallbedeemedtobethe
propertyoftheholderforthepurposeofpaymentofdividends,redem-
ptionandrightofparticipationingeneralmeetings.
(3)TheprovisionsofArt.7inofthisCodeshallapplytobearershares
whicharel05torstolen.
Art.341.
-
Conveyanceofregisteredshares.
(1)Ownershipofregisteredsharesshallbeestablishedbytherelevanten-
tryinthe.registerkeptaCtheheadoffice.
(2)Notransferiscompleteuntilrecordedinthisregister.
Art.342.-Liabilitytomeetcalls.
(1)Holders,previousassigneesandsubscribersshallbejointlyandseve-
rallyliableforcillsonshares.
(2)Anysubscriberorshareholderwhohasassignedhisshareshallcease
tobeliableforcallsaftertwoyearsfromthedateofthe"assignment.
(3)Whereashareholderfailstopaythecallattheduedate,heshallbe
liabletopayinterestatthelegalratewherenoratehasbeenprovided
inthearticlesofassociation.
(4)Thecompanymayfifteendaysafterthereceiptbytheshareholderof
aregisteredlette'demandingpaymentoffertheunpaidsharesforwe

84. COMMERCIAL CODE
11
byauction.Thesesharesshallbecancelledandnewsharesdelivered
tothepurchaser.
(5)Wherethesaleofthesharescannotbeeffected,thedirectorsmayoroer
theforfeitureofthesharesandretaintheamountspaidup,without
prejudicetoanyotherclaimtheymayhave.
(6)Whereunsoldshareshavenotbeenputincirculationduringthetrade
ingperiodinwhichforfeiturewasordered,theyshallbecancelled
andthecapitalreducedaccordingly.
(7)Amemberwhofailstomakepaymentsonshareswhentheybecome
dueshalllosehisvotingrights.
Art.343.
-
Temporarywarrants.
(1)Temporarybearerwarrantsshallonlybeissuedinrespectofbearer
shareswhicharefullypaid.Temporarywarrantsshallbeofnoeffect
wheretheyareissuedbeforebearersharesarefullypaid.
(2)Wheretemporaryregisteredwarrantsareissuedinrespectofbearer
shares,theyIrulyonlybetransferredundertheprovisionsrelatingto
theassignmentofdebts.
(3)Temporarywarrantsinrespectofregisteredsharesshallberegistered.
Theprovisionsrelatingtoregisteredsharesshallapplytothetransfer
ofsuchwarrants.
Art.344.-Jointholdings.
(I)Wheretenpercentormoreofthecapitalofonecompanyisheldby
asecondcompany,thefil'8tcompanymaynotholdsharesinthesecond
company.
(2)Wheretwocompanieseachhaveacapitalholdingintheothercom.
panyandoneofImOOholdingsistenpercentormoreofthecapital,
thecompaniesshalldeclaretheirholdingstotheMinistryofCommer.
ceandIndustrywhichshallrequirethecoD;lpaniesbyagreementto
reducetheirholdingssoastoconformtotheprovisionsofsuh-art(1).
Ifthecompaniesfailtoagree,theMinistryofCommerceandIndustry
shallorderthecompanypossessingthesmallerholdingtodisposeof
thatholding.
(3)Wheretherespectiveholdingsareequal,andfailingonecompanydis.
posingofitssharesintheother,eachcompanyshallreduceitshold.
ingtolessthantenpercentofthecapitaloftheother.
(4)
ThecompaniesshallfurnishtotheMinistryofCommerceandIndu.
stryaswomstatementthattheyhavecompliedwitheithersub-art.(2)
orsub.art.(3)ofthisArticle.
#'

85. 72 COMMERCIAL CODE
Art.345.-Rightsarisingoutofshares.
(1)Everyshareshallconferarighttoparticipationintheannualnetpro-
fitsandtoashareinthenetproceedsonawinding-up.
(2)Unlessotherwiseprovidedinthememorandumorarticlesofassociation,
theshareintheprofitsorinthenetproceedronawinding-upshallbe
calculatedinproportiontotheamountofcapitalheld.
(3)SubjecttotheprovisionsofArt.336,everyshareshallconfervoting
rights.
(4)Everyshareholderhasapreferredright,inproportiontohisholding,
toallotmentofcashsharesissuedonanincreaseofcapital.
(5)TheprovisionsofArt.470etseqshallapplytotheexerciseofthis
right.
(6)Similarrightsmaybereservedtoholdersofpreferencesharesbyan
expressprovisioninthememorandumorarticlesofassociation.
Art.346.-Liabilityoffoundersanddirectors.
SubjecttotheprovisionsofArt.3'09,foundersanddirectorsshallbejoint.
lyandseverallyliabletothecompanyandtothirdpartiesfortheobserv-
anceoftheprovisionsofthisChapter.
Chapter4.Directors,AuditorsandShareholders'Meetings
Section1.Management
Art.347.-Directors.
(1)Onlymembersofacompanymaymanagethecompany.
(2)Acompanyshallhavenotlessthanthreenormorethantwelvedi-
rectorswhoshallformaboardof<Ur~tors.
(3)Wherethememorandumofassociationdoes.notspecifythenumber
ofdirectorsbutfi~esonlyamaximumandaminimum,themeeting
ofsubscribeJ.~Shalldecidethenumberofdirectorstobeappoimed.
(4)Bodie~corporatemaybedirectors,butthechairmanoftheboardof
directorsshallbeapesron.
Art.348.-Chairman.
-
GeneralManager.-Secretary.
(1)Theboardshallelectachairmanfromamongitsmemberswhereno
chairmanhasbeenelectedbyameetingofsubscribersorshareholders.
(2)Theboardmayrevokethea~;;')intmentofachairmanelectedbythe
board.
(3)Ageneralmanagershallbeappointedbytheboard.Theprovisionsof
Art.34,35,109(1)(f)and121(h)ofthisCodeshallapply.

86. COMMERCIAL CODE 73
(4)Thegeneralmanagerisanemployeeofthecompanyandmarnotbe
adirector.
(5)Theboardmayappointasecretary.
Art.349.-Qualificatronshares.
(1)Thedirectorsshalldepositassecuritywiththecompanysuchnum.
beroftheirregisteredsharesinthecompanyasisfixedinthememo-
randumofassociation.
(2)Thesesharesshallnotbehandedbackuntiltheownershaveceasedto
bedirectorsandhavefullydischargedtheirliahilities,ifamy.tothe
company.
Art.350.-Appointmentofdirectors.
(1)Thefirstdirectorsmaybeappointedunderthememorandumorarti-
clesofassociation.Thisappointmentshallbesubmittedtoameeting
ofsubscribersforconfirmation.IfsuchconfirmationisnotgiVen,the
meetingshallappointotherdirectors.
(2)Subsequentdirectorsshallbeappointedbyageneralmeeting.
(3)Directorsmaynotbeappointedformorethanthreeyeus.
(4)UnlessotherwiseprovidedinthememorandumorartieLIeofassocia.
tion,directorsareeligibleforre-election.
(5)Wheremorethan,twodirectorsaretobeelected,suchelectioDsmay
nottakeplacesimultaneously.
Art.351.-Replacementofdirectors.
(1)Where,duringafinancialyear,oneormoreofthedirectorshaTe
lefttheboard,thesurvivingdirectorsmayappointother;personsto
completetheperiodforwhichthedirectorswhoMvelefttheboard
wereappointed.
(2)Theirappointmentsshallbesubmittedtothenextgeneralmeetingfor
-
confirmationandthegeneralmeetingmayconfirmtheirappointments
orappointotherdirectorsintheirplace.Theactsdonebypersons
appointedundersub-art.(1)shallbevalidnotwithstandingthatthe
appointmentofsuchpersonsisnotconfirmedbythegeneralmeeting.
(3)Wherethesurvivingdirectorsarelessthanhalfoftheboard,ofdirec-
tors,theymaynotappointdirectorsundersub-art.(1)butshallcon.
veneageneralmeetingtoappointotherdirectors.
(4)Wheretherearenosurvivingdirectors,theauditorssha1lconvenea
generalmeetingwithoutdelayfordirectorstobeelected.

87. 74 COMMERCIAL CODE
(5)Duringtheperiodpriortothecallingofthegeneralmeetingundersub-
art.(4),theauditorsmaycarryonthemanagementofthecompany.
Art.352.-Rightsofaminority.
Wherethereareseveralgroupsofshareholderswithadiffereutlegalstatus,
thearticlesofassociationshallprovideforeachgrouptoelecta~leastone
representativeontheboardofdirectors.
Art.353.-Remuneratwn.
(1)Directorsmayreceiveafixedannualxemuneration,theamountofwhich
shallbedeterminedbyageneralmeetingandchargedagainstgeneral
expenses.
(2)Thearticlesofassociationmayprovidethatthedirectorsmayreceive
aspecifiedshareinthenetprofitsofafinancialyear.
(3)Thefixedremunerationandshareintheprofitstobeallocatedtothe
boardofdirectorsshallbeallocatedinonesum.Theboardshallar-
rangethedistributionamongitsmembersinsuchproportionasitdeems
fit.
(4)Theamountoftheshareinthenetprofitsmaynotexceed10%.This
shareiscalculatedafterdeductionof:
(a)amountsallocatedtoreservefundsprovidedbylaworthearticles
ofassociation;
(b)thestatutorydividend,whereprovidedinthearticlesofassocia-
tionorwherenotprovided,asumrepresenting5%ofthepaid
upvalueofshareswhichhavenotbeenredeemed;
(c)amountsallocaitedtoreservefundsestablishedbyresolutionofa
gener'\!meeting;
(d)amountscarriedforward.
(5)Infixingtheshareundersub-art.(4)regardmaybehadtoamounts
distributedorcapitalisedandchargedinapreviousbalancesheet,with
theexceptionofthosearisingina1iuancialyearclosedbeforethecom-
ingintoforceofthisCode.
(6)Thedirector'sshareinthenetprofitsshallnotbepaidwherenodivid-
endhasbeendistributedtotheshareholders.
(7)TheMinistryofCommerceandIndustry,takingintoaccountthespe-
cialbenefitswhichhavebeenprovidedtodirectorshavingthestatus
offoundersandhavingregardtothepositionofthecompanyandto

88. COMMERCIAL CODE 75
thesalariesandbenefitsofitsemployees,may,onthepositionofshare.
holdersrepresentingnotlessthan10%ofthecapital,ordertJIereduc.
tionoftheremunerationofthedirectorswhereitconsidersitexcessive.
Art.354.
-
Removal.
Notwithstandinganyprovisiontothecontrary,directorsmayberemovedat
anytimebyageneralmeeting:providedthatadirectorwhowasremoved
withoutgoodcausemayclaimcompensation.
Art.355.
-
Restri~tionsonprivatetrade.
Unlessauthorisedbyagencralmeeting,directorsmaynotbepartuerswith
jointandseveralliabilityinrivalcompaniesnorcompeteagainstthecom-
panyeitherontheirownbehalforonbehalfofthirdparties.
Art.356.-Dealingsbetweenacompanyanditsdirectors.
(1)Anydealingsmadedirectlyorindirectlybetweenacompanyanda
directorshallreceivethepriorapprovaloftheboardofdirectorsand
noticeshallbegiventotheauditors.
(2)Approvalandnoticeundersub-art.(l)shallberequiredinrespect
ofanydealingsmadebetweenacompanyandanotherconcernwhere
oneofthedirectorsofthecompanyisowner,partner,agent,director
ormanagerofsuchconcern.
(3)Theauditorsshallsubmitaspecialreporttothegeneralmeetingrelat-
ingtodealingsapprovedbytheboardofdirectors.Themeetingmay
takeanyactionitthinksfit.
(4)Dealingsapprovedbythemeetingmayonlybesetasideontheground
offraud.
(5)Dealingsnotapprovedshallremaininforcebutthedirectorconcern.
edshallbeliablefordamagesarisingfromfraudandifhefailsto
meethisliabilitytheboardofdirectorsshallbeliable.
(6)TheprovisionsofthisArticleshallnotapplytonormalagreements
betweenthecompanyanditsclients.
Art.357.
-
Directorsmaynotcontractloonswiththecompany.
(1)DirectorsofacompanyotherthanbodiescorporatemaynOtborrow
moneyfromthecompany,obtainanoverdraftincurrentaccountor
haveanyobliga>tionguaranteedinrespectofbusinesstransactedwith
thirdparties.
(2)
Theprovisionsofsub-art.(1)shallnotapplyinrespectofdaytoday
businessofacompanywhichcarriesonbankingbusiness.
)

89. 16
COMMERCIAL CODE
4ft.858..-DecUit)naOftheboordofdirectors.
(1)Nodeci8ionmaybetakenbytheboardofdirectorsunlessamajority
of'direCtorsispresent.Decisionsshallbetakenbyanabsolutemajority.
Votingmaybebyproxy.
(2)Anaheentdirectormayberepresentedataboardmeetingonlyby
aDOtIaerdirectorwhoactsasproxyfortheabsentdirectoronly.
(3)DecUdonsoftheboardshanbedrawnupasminutesandshallbe
signedbythechairmanandasecretary.Theminutesshallbekeptin
.:inmatebook.
(4)Copiesofdecisionsshallbesignedbythechairmanandasecretary.
"-t.
359,-R~ofdirectors.
(1)Everycompanyshallkeepatitsheadofficearegisterofitsdirectors
andmanagerswith,particularsastotheircivilstatus,profession,and
anydirectorshipheldinothercompaniesand,wherethedirectorisa
'VJD.pany,thenameofthecompanyandtheaddressofitsheadoffice.
(2)Anparticwarsenteredintheregisterandanyamendmentsthereto
aha1lbesenttotheMinistryofCommerceandIndustrywithinfifteen
daysfromthe.makingoftheentryoramendment.
(3)Tilereptershallbeopentoinspectioninaccord1lncewithArt.331(3).
Art.360.
-
Regi8terofsharesanddebenturesheldbythedirectors.
(1)EveryCOIDp8D.ytballkeepatitsheadofficearegistershowingthenum.
berandvalueofsharesordeben!turesheldbyeachdirector:
(JI.)juthecompany;
(b)insubsidiarycompanies;
(c)inanyholdingcompanyofwhiellthecompanyisasubsidiary.
(2)The andanydocumentstobesubmittedatthegeneralmeet.
ingshallheopentoin8pectionbyanyshareordebentureholderbe-
fme.theannualgeneralmeeting.
(3)TheregistershallbeopentoinspectioJlbyarepresentativeoftheMi.
nistryofCommtUWandIu.dU$yatanytimeand.extractsoracopy
oftheregistermaybetaken.
(')TiIwWfiiste.rofdUectonshallbeavailableattheannualgeneralmeet-
jq
for~QI1 byanymemberattendingthemeeting.
Art.361.-Statementstobeprovidedconcerningremunerationofdirectors.
(1)ThebaJa:acesheetsubmittedtotheannuaJgeneralmeetingshallshow

90. COMMERCIAL CODE 71
thetotalamountofremuneration,allowances,annuities,Jetinmlent
benefitsandbenefitsinkindgiventothedirectors.
(2)Loansorguaranteestodirectorsshallalsobeshown.
Art.362.-Dutiesofdirectors.
InadditiontotheirdutiesunderArt.364,directorsshallberesponsiblefor:
(a)keepingregularrecordsofthemanagementandofmeetings;
(b)keepingaccountsandbooks;
(c)submittingtheaccountstotheauditorsandanannualreportofthe
company'soperationsincludingafinancialstatementtothemeetings;
(d)conveningmeetingsasprovidedinthearticlesofassociation;
(e)conveningageneralmeetingwithoutdelaywherethreequartersof
thecapitalarelost;
(f)settingupthereservefundsrequiredbylaworthearticlesof8880-
ciation;
(g)applyingtothecourtwherethecompanystopspaymentswithaview
eithertoacompositionwithcreditorsorthewinding-upofthecom.
pany.
Art.3()";.
-
Powersofdirectors.
(I)Thedirectorsshallhavesuchpowersasaregiventothembylaw,the
memorandum orarticlesofassociationandresolutionspassedatmeet.
ingsofshareholders.
(2)Thearticlesofassociationshallspecifywhetherthedirectorsarejoint.
lyresponsibleasmanagersoragentsofthecompanyorwhetherone
onlyofthedirectorsisresponsible.
(3)Personsauthorisedtoactasagentsforthecompanymayexercisein
itsnametheirpowersasagents.Anyrestrictionontheirpowersshall
notaffectthirdpartiesactingingoodfaith.
Art.364.
-
Liabilityofdirectorstothecompany.
(I)Direetorsshallberesponsibleforexercisingthedutiesimposedonthem
bylaw,thememorandum orarticlesofassociationandresolutionsof
meetings,withthecareduefromanagent.
(2)Directorsshall.bejointlyandseverallyliabletothecompanyforda.
magecausedbyfailuretocarryouttheirduties.
(3)Directorswhoarejointlyandseverallyliableshallhaveageneralduty
toactwithduecareinrelationtothegeneralmanagement.

91. 78
COMMERCIAL CODE
(4)Directorsshallbejointlyandseverallyliablewhentheyfailtotake
allstepswithintheirpowertopreventortomitigateactsprejudicial
tothecompanywhicharewithintheirknowledge.
(5)Directorsshallberesponsibleforshowingthattheyhaveexerciseddue
careanddiligence.
(6)Adirectorshallnotbeliablewhereheisnotatfau1tandhascaused
aminutedissentingfromtheactionwhichhasbeentakenbytheboard
tobeenteredforthwithinthedirectors'minutebookandsenttothe
auditors.
Art.365.
-
Proceedingstoenforcedirectorsliabil,ity,
(1)Noproceedingsshallbeinstitutedagainstthedirectorswithoutare-
solutionofageneralmeetingtothiseffect.Sucharesolutionmaybe
movedandadoptedalthoughnotontheagenda,
(2)Wherearesolutiontoinstituteproceedingsortocompromisetheclaim
isadoptedhyavoteofshareholdersrepresentingatleastonefifthof
thecapital,thedirectorconcemedshallberemoved.Thesamemeet-
ingshallappointadirectortoreplacethedirectorwhohasbeenre-
moved.
(3)Aresolutionnottoinstituteproceedingsandtocompromiseshallnot
beadoptedwhereshareholdersrepresentingonefifthofthecapital
voteagainsttheresolution.
(4)Wherearesolutionundersub-art.(2)isadoptedbutthecompany
failstoinstituteproceedingswithinthreemonths,theshareholderswho
votedfortheresolutionmayjointlyinstituteproceedings.
Art.366.-Liabilitytocreditors.
(1)Directorsshallbeliabletothecompany'screditorswheretheyfailto
preserveintaotthecompany'sassets.
(2)Proceedingsmaybeinstitutedhythecreditorsagainstthedirectors
wherethecompany'sassetsareinsufficienttomeetitsliabilities.
(3)Aresolutionofthegeneralmeetingnottoinstituteproceedingsagainst
thedirectorsshallnotaffectthecreditor'srights.
(4)Creditorsmaynotapplytosetasidearesolutiontocompromiseexcept
onthegroundsavailabletothemundercivillaw.
Art.367.-Proceedingsinstitutedbyshareholdersandthirdparties.
NothinginthisSectionshallaffecttherightsofshareholdersorthirdparties
whohavcbeeninjuredbythefaultorfraudofthedirectors.

92. COMMERCIAL CODE 79
Section2.Auditors
Art.368.
-
Appointmentofauditors.
(1)Thegeneralmeetingofeverycompanylimitedbysharesshallelect
oneormoreauditorsandoneormoreassistantauditors.
(2)Shareholdersrepresentingnotlessthan20%ofthecapitalmayappoint
anauditorselectedbythem.
(3)Wherethereismorethanoneauditor,theymayexercisethp-irduties
jointlyorseparately.
(4)Abodycorporatemayactasauditor.
Art.369.
-
Nominationandtermofappointment.
(1)Auditorsshallbeelectedbythemeetingofsubscribersandthereafter
bytheannualgeneralmeeting.
(2)Auditorselectedbythemeetingofsubscribersshallholdofficeuntil
thefirstannualgeneralmeeting.Auditorselectedat'anannualgeneral
meetingmayholdofficeforthreeyears.
(3)Whensigningasauditor,anauditorshalladdthenameofthecom-
panywhoseaccountsheisauditing.
Art.370.
-
Personsnotcompetent.
(1)Thefollowingpersonsmaynotbeelectedasauditors:
(a)founders,contributorsinkind,beneficiariesholdingspecialbene-
fits,directorsofthecompanyorofoneofitssubsidiariesorofitl!
holdingscompany;
(b)spousesorrelativesbyconsanguinityofaffinitytothefourthde.
greeinclusive,ofthepersonsmentionedinsub-art.(1)(a);
(c)personswhoreceivefromthepersonsmentionedinsub-art.(1)
(a)asalaryorperiodicalremunerationinconnectionwithduties
otherthanthoseofanauditor.
(2)Auditorsmaynotbeappointeddirectorsormanagersofthecompany
whichtheyaudit,norofoneofitssubsidiariesoritsholdingcompany
withinthreeyearsfromthedateoftheterminationofthdrfunctions.
(3)Reportssubmittedbyanauditorandadoptedbytheannualgeneral
meetingshallnot,saveinthecaseoffraud,beinvalidmerelyby
reasonofthefaotthattheprovisionsofthisArticlehavenotbeen
observed.

93. 80 COMMERCIAL CODE
Art.371.-Revocationoftheappointmentofanauditor.
Ageneralmeetingmayatanytimerevoketheappointmentofanyauditor
withoutprejudice'toan'Yclaimnemayhaveforwrongfuldismissal.
Arl.S7i.~Remuneration.
(1)Theremunerationofauditorsshallbefixedbythegeneralmeeting
OJ!theirappointment.
(2)WherethegeneralmeetingfailstoagreeontheremunerationofthE
auditors,theMinistryofCommerceandIndustrymayontheapplica.
tionofanymterestedpartyfixtheremuneration.
Art.873.-ProfeuionaZteereey.
AuditorsshallbeliabletothepenaltiesprescribedinAI'!:.407ofthePenal
Codeforbreachesofprofessionalsecrecy.
Art.374.
-
Dutwaoftlu!auditors.
Theauditorsshallhavethefollowingduties:
(a)toauditthebooksandsecuritiesofthecompany;
(b)towrifytheCorrectnessandaccuracyoftheinventories,balancesheets
andprofitandlossaccounts;
(c)tocertifythatthereportoftheboardofdirectorsreflectsthecorrect
stateofthecompany'saffairs;
(d)tocarryoutsuchspecialdutiesasmaybeassignedtothem.
Art.375.-Reporttogeneralmeetings.
(1)Theauditorsshallsubmittotheannualgeneralmeetingawrittenre-
portonthemannerinwhichtheyhavecarriedouttheirdutiesand
theircommentsonthereportoftheboardofdirectors.
(2)Theyshallrecommendapprovaloftheaccountsandmakesuch
e-oJJ1JDent!!thereonastheythinkfitorrefusetorecommendapproval,
givingrea'SOnsforreferringthematterbacktothedirectors.
(3)Theymaycommentontheproposeddistributionofprofits.
(4)Thegeneralmeetingshallnotconsiderthebalancesheetinthe
absenceofareportundersub.art.(l).
.
Art.816.-Auditor$toinformdirectorsofirregularities.
(1)Wheretheauditorsfindirregularitiesorbreachesoflegalorstatutory
requirements,theyshallinformthedirectorsand,wheregraveirregu.
Iaritie8orbreacheshaveoccurred,theyshallinformthegeneralmeet-
ing.
(2)The1IUditorsshallinformthepublicprosecutorofanymatterswhich
wouldappeartodisclosethecommissionofanoffence.

94. COMMERCIAL CODE 81
Art.377.-Callingofgeneralmeetings.
(1)Theauditorsshallcallageneralmeetingwherethedirectorsfailto
dosounderthelaworinaccordancewiththememorandumorarticles
ofassociation.
(2)Theyshallcallageneralmeetingwhereshareholdersrepresentingat
least2,0%ofthecapitalsorequest.
(3)Wherethereareseveralauditors,theymayjoimlycallameetinginac-
cordancewiththearticlesofassociationandmay,wheretheythink
fit,fixforthemeetingaplaceotherthanthecompany'sht:.adoffice
orotherplacelaiddowninthearticlesofassociation,butinthesame
locality.
(4)Theauditorsshallpreparetheagendaandareporttobereadatthe
meetinggivingthereasonsforcallingthemeeting.Oneoftheauditors
shallpresideoverthemeeting.
(5)Wheretheauditorsdisagree,oneofthemmaymovethecourthaving
jurisdictionintheareainwhichtheheadofficeissituateforanorder
appointinganofficerofthecourttoexercisethepowersundersub-
art.(3)and(4).
(6)ExpensesincurredunderthisArticleshallbebornebythecompany.
Art.378.
-
Powers.
(1)Theauditorsmayatanytimemakeonthespotsuchauditsandchecks
astheythinknecessaryandmaycallforanyinformation,agreements,
books,accounts,minutebooksandsuchotherdocumentsasmaybere-
quiredfortheproperexecutionof'theirduties.
(2)Audit8rsshallbepresentatshareholders'meetingsandattheannual
generalmeeting.
Art.379.
-
Auditoftheaccountsofaholdingcompany.
AuditorsshallexercisetheirpowersunderArt.378inrespectoftheac-
countsofholdingcompaniesunderArt.451.
Art.380.-Liabilityofauditors.
(1)Auditorsshallbecivillyliabletothecompanyandthi,.dpartiesfor
anyfaultintheexerciseoftheirdutieswhichoccasionedloss.
(2)Anauditorwhoknowinglygivesorconfirmsanuntruereportconcern-
ingthepositionofa(''ompanyorfailstoinformthepublicprosecutor
ofanoffencewhichheknowstohavebeencommittedshallbepunish-
edunderArt.438orArt.664ofthePenalCede,uthecasemaybe.

95. 82 COMMERCIAL CODE
Art.381.-Investigatumintothepositionofacompanyontherequestof
sTun-eholders.
(I)Shareholdersrepresentingatleastonetenthofthesharesissuedmay
asktheMinistryofCommerceandIndustrytoappointoneormore
qualifiedinspectorstomakeaninvestigationandreportonthecom-
pany'sstateofaffairs.
(2)ThepetitionshallcontainsuchevidenceastheMinistrydeemsneces-
saryandthepetitionersmayberequiredtoguaranteeuptoamaxi-
mumof500Ethiopiandollarstheexpensesoftheinvestigation.
Art.382.-Investigationcompulsory.
TheMinistryshallappointoneormorequalifiedinspectorstoactunder
Art.381wheretherehasbeenaresolutionofageneralmeetingoran
orderofthecourt.
Art.383.
-
InvestigationorderedbytheMinistryofCommerceandIndustry.
TheMinistryofCommerceandIndustrymayappointinspectorstocon-
ductaninvestigationwhereithasgoodreasontobelievethattheopera-
tionsofthecompanyaresuchasmayreveal:
(a)fraudoncreditors;or
(b)actsprejudicialtoaclassofshareholders;or
(c)illegalorfraudulentactivities;or
(d)actswhichconstituteoffencesagainstthelaw.
Art.384.-InvestigationsmaybeextendedtotheaffairsofMldingcompa-
niesandsubsidiaries.
WhereinspectorshavebeenappointedunderArt.381,382or383toinve-
stigateintotheaffairsofacompanyandtheyareoftheopinionthatafull
investigationintotheaffairsofsuchcompanycannotproperlybecarried
outwithoutaninvestigationintotheaffairsoftheholdingorsubsidiary
companyofsuchcompany,theyshallreporttheiropiniontotheMinistry
ofCommerceandIndustrywhichmayorderthattheinvestigationheex-
tendedtotheaffairsoftheholdingorsubsidiarycompany.
Art.385.
-
Dutiesofcompaniesunderinvestigation.
(I)Thedirectorsandauthorisedagentsofanycompanyunderinvestiga-
tionshallproducetotheinspectorsallhooksanddocumentsrequired
bythemandfurnishallinformationnecessaryfortheinvestigation.

96. COMMERCIAL CODE
83
(2)Anydirectororauthorisedagentwhoobstmctstheinspectorsinthe
courseoftheinvestigationshallbereportedtotheMinistryofCom-
merceandIndustrywhichmaycaU8eproceedingstobeinstitutedun-
derArt.433ofthePenalCode.
Art.386.
-
Inspectors'Report.
Onreceiptoftheinspectors'report,theMinistryofCommerceandIndu.
stryshallsendacopythereof:
(a)tothecompanieswhoseaffairshavebeeninvestigated;
(b)totheshareholderswhopetitionedforinvestigation;
(c)tothecourtwhichorderedaninvestigation.
Art.387.
-
Investigationregardingrwminees.
(1)WheretheMinistryofCommerceandIndustryhasgoodreasonto
believethatrpg-isteredshareholdersareonlynomineesofthepersons
whoexerciseeffectivecontrolofacompany,theMinistrymayappoint
inspectorstoascertaintherealownersofthesharesunderArt.383.
(2)TheMinistrymayorderaninvestigationundersub-art.(1)atthe
requestofshareholdersrepresentingnotlessthanonetenthofthe
sharesissued.
Section3.Shareholders'Meetings
Paragraph1.-Generalprovisions
Art.388.-Generalrules.
(1)Ageneralmeetingofshareholders,properlyestablishedandconduct-
ingitsbusinessinaccordancewiththelaw,actsonbehalfofallshare-
holders.Decisionsofageneralmeetingbindallshareholderswhether
absent,dissenting,incapableorhavingnorighttovote.
(2)Theprovisionsofsub-art.(1
Jshallapplymutatismutandistospecial
meetings.
Art.389.-Rightspropertoshareholders.
(1)NotwithstandingtheprovisionsofArt.388,noshareholdermaybe
deprivedwithouthisconsentoftherightsinherentinmembership.
(2)Rightsinherentinmembershiparerightswhich,underthelaworthe
memorandumorarticlesofassociation,donotdependupondecisions
ofthegeneralmeetingorboardofdirectorsorwhichareconnected
withtherighttotakepartinmeetings,suchastherighttohea

97. 84 COMMERCIAL CODE
member,tovote,tochallengeadecisionofthccompanyortoreceive
dividendsandashareinawinding-up.
Art.390.
-
Classesofmeetings
(1)Shareholders'meetingsmaybegeneralorspecial.
(2)Generalmeetingsareordinaryorextraordinaryandcompriseshare-
holdersofallclasses.
(3)Specialmeetingscompriseonlyshareholdersofaspecificclass.
Art.391.
-
Callingmeetings.
(1)Generalmeetingsarecalledbythedirectors,theauditors,theliqui-
datorsor,whereappropriate,byanofficerofthecourt.
(2)Thecourtofthepl~cewherethehead-officeissituatemayappointan
officerofthecourttocallameetingandtodrawuptheagendafor
considerationwhereshareholdersrepresentingonetenthoftheshare
capitalshowthatsuchanappointmentisnecessary.
Art.392.
-
Modeofcalling.
(1)Noticescalli.,,;nlcetingsshallbeissuedinaccordancewiththearticles
ofassociationandshallbepublishedintheOfficialCommercialGa-
zetteandinonenewspaperauthorisedtopublishlegalnoticesandcir-
culatingintheareawheretheheadofficeissituate.
(2)Theprovisionsofsub.art.(1)shallnotapplywhereallthesharehol-
dersareregisteredandarenotifiedofmeetingsbyregisteredletterat
thecompany'sexpense.
(3)Anyregisteredshareholdermay,byregisteredletter,requirethecom-
panytonotifyhimofmeetingsbyregisteredletterathisownexpense.
(4)Thecallingofmeetingsmadenecessaryintheabsenceofaquorum
isprescribedintheprovisionsrelatingtoeachclassofmeeting.
Art.393.-Ordinarymeetingscalledbyreasonoflackofquorum.
Whereanordinarygeneralmeetinghasbeenunabletofunctionforlack
ofthequorumprovidedinArt.421,asecondmeetingshallbecalledin
thesamemannerandwithinthesameperiodoftimeasthefirstmeeting.
Art.394.
-
Extraordinaryorspecialmeetingscalledbyreasonoflackofquorum.
WhereforlackofthequorumprovidedinArticles425and428anextraordi-
naryorspe<1ialmeetinghasbeenunabletofunotion,asecondandathird
meeting,ifnecessary,shallbecalledbytwonoticespublishedatoneweek's

98. COMMERCIAL CODE
85
intervalintheOfficialCommercialGazetteandinanewspaperautJhorisedto
publishlegalnotices,orundertheprovisionsofArt.392(2),whereappro-
priate.
Art.395.
-
Timeofnoticeofmeetings.
Noticetohegivenforafirstmeetingshallbefifteenfulldaysandfora
secondorsubsequentmeetingcalledforlackofaquorumatthefirstmeet.
ing,eightfulldays,irrespectiveofthemodeofcalling.
Art.396.
-
Contentsofnoticesofmeetings.
(1)Noticesofmeetingsshallgivethecompany'sname,thenature,capital
andheadoffieeofthecompanyandtheplacewhereandtime,within
whidhhearershares(ifany)aretohedeposited.
(2)Noticesofsubsequentmeetingsmadenecessarybylackofquorumshall
givethedatesoftheabortivemeetings.
Art.397.
-
Agenda.
(1)SaveasisprovidedinArt.391(2),theagendashallbepreparedby
thepersoncallingthemeeting.
(2)Unlessotherwiseprovided,onlyitemsontheagendamaybediscussed.
However,themeetingmayatanytimerevoketheappointmentofdi-
rectorsandappointnewdirectorsintheirplace.
(3)Onlyitemsontheagendaofthefirstmeetingmaybediscussedatsub-
sequentmeetingsmadenecessarybylackofquorum(Art.393and
394).
Art.398.
-
Proxies.
(1)
4-shal'eholdermaynominateoneproxyonly.Whereashareholderhas
appointedaproxy,hemaynotvoteinperson.
(2)Therepresentationofjointholdersofshares,ofreversionersandof
pledgeesisprovidedforinArt.328and329.
Art.399.
-
Requirementsinrespectofconductofbusiness.
(1)Ameetingisnotlegallyconstitutedfortakingdecisionswherethere
isnotaquorumandamajority.
(2)Thequoruminrelationtothecapitalisaslaiddownforeachclass
ofmeeting.Forallmeetingsthequorumshallhecalculatedonallthe
sharesmakingupthecapital,lesstheseshareswihichcarrynovoting
riglhtsunderthelaworthearticlesofassociation.
(3)Thememorandum andthearticlesofassociationmaynotvarythe
provisionsofthisCoderelatingtomajorityandquorum.

99. 86 COMMERCIAL CODE
Art.400...;..Sharesredeemedbythecompanycarrynovotin:Jrights.
AcompanymaynotvotewithshareswhichithasredeemedunderArt.332.
Art.4IIH.-Periodoftimeforregistrationofshares.
Thearticlesofassociationshalldeterminetheperiodoftimewithinwhich
theholdersofregisteredsharesshallbeenteredinthecompany'sregister
.
andbearersharesdeposited.Thisperiodoftimeshallnotexpiremorethan
fivefulldaysbeforethedateofthemeeting.Thisperiodmaybeshortened
inthearticlesofassociation.
Art.4<12.-Proxy.
Theformofproxy,theplacewhereandthetimewithinwhichtheyshall
bedepositedshallbedeterminedbythedirectors:Providedthatsuchpe-
riodoftimemaynotexpiremorethanthreefulldaysbeforethemeeting.
Art.403.-Attendancesheet.
(1)AnattendancesheetshaHbekeptforeachmeeting.Itshallshowthe
namesandaddressofsha:.'eholderspresentorrepresentedbyproxyand
thenumberofsharl'5andvotesheldbyeachshareholder.
(2)Theattend..ncesheetshallbeinitialledbytheshareholdersortheirpro.
xies,andshallhecertifiedascorrectbythebureauofthemeeting.
Art.404.-Chair11l4n.
(1)Thechairmanoftheboardofdirectorsor,inhisabsence,thesenior
directorshallpresideatallmeetings.Intheabsenceofbothsuchper-
sons,thepersonnamedinthearticlesofassociationorappointedby
themeetingshallpreside.
(2)Wherethemeetinghasbeencalledbytheauditors,anofficerofthe
courtoraliquidator,thepersoncallingthemeetingshallpreside.
Art.405.-Tellersandsecretary.
(1)Thetwomembersofthemeetingwhoholdorrepresentthegreater
numberofsharesshallbeappointedtellers,wheretheyarewillingto
acceptsuchappointment.
(2)Thebureaushallappointasecretarywho,unlessotherwiseprovided,
neednotbeashareholder.
Art.40,6.-Righttoinspectdocuments.
(1)EveryshareholdermayataRtimes,lilttheheadoffice,inspectand
takecopiesof:
(a)balancesheetsandprofitandlossaccounts;

100. COMMERCIAL CODE 87
(b)reportssubmittedbythedirectorsandbytheauditorstogeneral
meetingsrelatingtothethreeprecedingfinancialyears;
(c)minutesandattendancesheetsofthesemeetings.
(2)Whereacompanyrefusestogiveashareholderaccesstoanyofthe
documentsspecifiedinsub-art.(1),theMinistryofCommerceand
Industryshallbeinformed.
(3)TherightsunderthisArticleareenjoyedbyjointholdersofshares,
reversionersandusufructuaries,andpledgees.
Art.407.
-
Votingrightsattachedtoshares.
(1)Thevoting];ightsattachedtoordinaryordividendsharesshallbein
proportiontotheamountofcapitalrepresented.
(2)Everysharecarriesatleastonevote.
Art.408.-Limitationofvotes.
Thememorandumorarticlesofassociationmaylimitthenumberofvotes
whichshareholdersmayexerciseatmeetingssolongassuchlimitationis
equalforallshareswithoutdistinctionofclass.
Art.409.
-
Conflictsofinterest.
(1)Wheretheinterestsofamember,actingonhisownbeha1for011.be-
halfofathirdparty,conflictwiththeinterestsoftheCOInpmy.III1Ch
membermaynotexercisehisrighttovote.
(2)WherefailuretocomplywiththeprovisionsofsWHu-t.(1)reeultain
aresolutionbeingadopted'prejudicialtothecompany,suchftIIOludon
maybesetasideinaccordancewiththeprovisionsofArt.U6.
(3)DirectorsmaynotvoteonresolutionsrelatingtotheirdutiesaDdli8.
bilities.
(4)ShareswhicharedeprivedofvotingrightsunderthisArticleab8I1he
takenintoaccountincalculatingthequorum.
Art.410.-ProvisionsrestrictingthefreeexerciseoffloringriglwintlGlid.
AnyprovisionrestrictingthefreeexerciseofvotingrightsinaharehoJden'
meetingsshallbeofnoeffect.
Art.411.
-
Minutes.
(1)Discussionsatmeetingsshallbereducedtominutesenteredinami-
nutebookandsignedbyamajorityofthemembersofthebureau.
Suchentryshallbecertifiedascorrectbythechairmanoftheboard
ofdirectorsofthecompanyorbytwodirectors.
(2)Theminutesofameetingshallinclude:

101. 88 COMMERCIAL CODE
(a)themannerinwhichthemeetingwascalled;and
(b)theplaceanddateofthemeeting;and
(c)theagenda;and
(d)themembersofthebureau;and
(e)thenumberofsharesrepresentedandthequorum;and
(f)thedocumentslaidbeforethemeeting;and
(g)asummaryofthedi5cussions;and
(h)theresultsofvotestaken;and
(i)thetextsofresolutionsadopted.
Art.412.-Minutewherethereisnoquorum.
Whereameetinglacksaquorum,thechairmanshallrecordthisfactin
theminutebook.
Art.413.-Copiesorextractsoftheminutes.
Copiesorextractsoftheminutesshallbecertifiedbythechairmanofthe
boardofdirectorsorbytwodirectors.
Art.414.
-
Adjournment
?f
meetings.
(1)Whereshareholdersrepresentingonethirdofthecapitalrepresented
atameetingconsiderthattheyhaveinsufficientinformationuponthe
matterstobediscussed,thcymayrequirethemeetingtobeadjourned
foraperiodnotexceedingthreedays.
(2)Thisrightmaybeexercisedonceinrespectofonematter.
Art.415.-Informalmeetingofallshareholders.
(1)Shareholdersorproxiesrepresentingallthesharesmaybyagreement
holdageneralmeetingwithoutfurtherformality.
(2)Whereshareholdersorproxiesrepresentingallthesharesarepresent,
themeetingmaytakeanydecisionandadoptanyresolutionasina
generalmeeting.
Art.416.-Effectofresolutions.
(1)Resolutionsadoptedbyameetinginaccordancewiththelaw,theme-
morandumorarticlesofassociationshallbindallmembers,including
thosewhowerenotpresentordissented.
(2)Resolutionsadoptedcontrarytothelaw,~hememorandumorarticlesof
associationmaybechallengedwithinthreemonthsfromtheresolution
butinnocaseafterthreemonthsfromtheentryoftheresolutionin
thecommercialregister.

102. COMMERCIAL CODE 89
(3)Applicationstosetasideresolutionsshallbemadetothecourtwithin
whoseareaofjurisdictiontheheadofficeissituate.Thecourtmayre-
quire1!heclai.m.anttoprovidesecurityforcosts.
(4)Ontherequest<,ftheclaimantandafterhearingthedirectorsandaudio
tors,thecourtmay,wheregoodrea5()llSaredisclosed,suspendthe
executionoftheresolutionchallengedpendingthecourt'sdecision.
(5)Wherearesolutionissetaside,thedecisionofthecourtshallbindall
membersandthedirectorsshallberesponsiblefortakingallmeasures
necessarytoimplementsuchdecision.
(6)NothinginthisArticleshallaffectrightsofthirdpartiesacquiredin
goodfaithwhiletheresolutionwaseffective.
PARAGRAPH 2.-ORDINARYMEETINGS
Art.417.-Righttoinspectdocuments.
InadditiontohisrightsunderArt.406,anyshareholdermay,duringthe
fifteendayswhichprecedeanannualordinarygeneralmeeting,inspect8Dd
takecopiesattheheadofficeofthebalancesheet,theprofitand10118account
andthedirectors'andauditors'reportstobesubmittedattheannualge-
neralmeeting.
Art.418.-Meetings.
(1)Withinfourmonthsfromtheendofeachfinancialyear,anordinary
annualgeneralmeetingshallbecalledbythedirectors.
(2)Thisperiodoftimemaybeextendedtosixmonthsbythearticlesot
association.
(3)Wherenecessary,otherordinarygeneralmeetingsmaybeheld.
Art.419.-Businessconductedatthemeeting.
(1)Thebalancesheet,theprofitandlossaccountandthedirectors'8Dd
auditors'reportsshallbereadoutattheordinarygeneralmeeting.After
discussionitshallapproveorrejecttheaccountsforthepastfin.n~,1
year.Itshalldecide,wherenecCSDary,ontheallocationanddUtriba.tion
ofprofitsandonallquestionsarisingoutoftheaccountsfortheput
financialyear.
(2)Themeetingmayappointorremovedirectorsandauditors,decidethe
amountoftheirremuneration,amendwhereneceeurythe8CCOUDU
afterconsideringthereportrequiredunderArt.375,approvethei8IIIe
ofdebenturesaswellastheguaranteesattachedtheretoanddecideall
mattersotherthanthosereserved,toextraordinarygeuenlmeetiup.

103. 90
COMMERCIAL CODE
Art.420.
-
Takingpartinmeetings.
(1)Notwithstandinganyprovisiontothecontrary,anyshareholderhasthe
righttotak6partinordinarymeetingswithoutregardtothenumber
ofsharesheld.
(2)Unlessotherwiseprovidedinthearticlesotassociation,anypersonmay
berepresentedbyathirdparty,whetherashareholderornot.
t.,t21.
-
Majorityandquoruminordinarygeneralmeetings.
(1)Whenfirstcalled,generalmeetingsshallbecomposedofthatnumber
ofshareholderswhichrepresentseitherinpersonorbyproxyatleast
one-quarterofthevotingshares.
(2)Whencalledforasecondtime,themeetingmaybeheldanddiscussions
madewithoutregardtothenumberofvotingsharesrepresented.
(3)Decisionsaretakenbyasimplemajority,abstentionsandblankballots
(ifany)beingdisregarded.
PARAGRAPH3.-
EXTRAORDINARYMEETINGS
Art.422.
-
Righttoinspectdocuments.
(1)Anysllmwholdermay,duringthefifteendayswhiclhprecedeanexua-
ordinarymeeting,inspectandtakecopiesattheheadofficeofthetext
ofresolutionstobeproposedoroftheauditors'reporttobesubmitted.
(2)Ashareholdermayrequirethecompanyinwritingtosendhimcopies
athisownexpense.
Art.423.-Business.
Unlessotherwiseprovidedbylaw,onlyextraordinarymeetingsmayamend
thememorandum orarticlesofassociation.
Art.424.-Admission.
Anyshareholder,includingpreferenceshareholders,maytakepartinan
extraordianxymeetingwithoutregardtothenumberofsharesheld.
Art.525.
-
Majorityandquoruminextraordinarymeetings.
(1)Notlessthanatwo-thirdsmajorityisrequiredforaresolutiontobe
adoptedinanextraordinarymeeting,abstentionsandblankballotsbe-
ingdisregarded.
(2)Resolutionsto:
(a)changethenationalityofthecompany;or
(b)requireshareholderstoincreasetheirinvestmentsinthecompany,

104. COMMERCIAL CODE 91
shallonlyheadoptedwheretheholdersofallshareshavingvoting
rightsarepresentorrepresentedandthevoteisunanimous.
(3)Resolutionsotherthanresolutionsundersub-art.(2)mayonlybeadop-
ted:
(a)atafirstmeeting,wherenotlessthanonehalfoftheholdersof
allshM'eshavingvotingrightsarepresentorrepresented;
(b)altasecondmeeting,wlhierenotlessthanonethirdoftheiholders
ofaiIlshaI'eshavingvotingrightsarepresentorrepresented;
(c)atathirdmooting,wherenotlesstihanonetenthoftheIT10ldersof
allshareshavingvotingrightsarepresentorrepresnted.
(4)NothinginthisArticleshallaffecttheprovisionsofArt.463.
PARAGRAPH 4.
-
SPECIALMEETINGS
Art.426.-Caseswherespecialmeetingsaretobecalled.
Aresolutionofageneralmeetingtomodifytherightsofaclassofshare-
holdersbecomeseffectiveonlywhenconfirmedbyaspecialmeetingofthe
shareholdersintheclassconcerned.
Art.427.-Righttoinspectdocuments.
TheprovisionsofArt.422shanapplymutatismutandistospecialmeetings.
Art.428.-Quorumandmajorityinspecialmeetings.
(1)Specialmeetingsshallhecomposed:
(a)atafirstmeeting,ofshareholdersholdingnotlessthanonehalfofall
votingshares;
(b)atasecondmeeting,ofshareholdersholdingnotlessthanonethirdof
allvotingshares;
(c)atathirdmeeting,ofshareholdersholdingnotlessthanonequarterof
allvotingshares.
Shareholdersmayherepresentedbyproxies.
(2)ThemajorityinspecialmeetingsshanheasprovidedinArt.425(1).
Chapter5.Debentures
Art.429.-Caseswhereissueisprohibited.
Nonegotiabledebenturesshallheissuedby:
(1)individuals;
(2)companieswhosecapitalisnotfullypaid;

105. 92 COMMERCIAL CODE
(3)companieswhichhavenotissuedabalancesheetinrespectoftheirfirst
finaneialyear.
Art.430.-Maximumamountoftheissue.
(1)Debenturesissuedbyacompanymaynotexceedtheamountofpaid
upcapitalshowninthelastadoptedbalancesheet.Thisamountmay
beexc~ded:
(a)wherethecompany's
debenturesissueddo
immovablepropertyismortgagedandthe
notexceedtwothirdsofthevalueofthe
mortgage;or
(b)wheretheexcessoverthepaid-upcapitalisguaranteed:
(i)byregisteredsecuritiesorsecuritiesissuedorguaranteedby
theStateandthedateofredemptionisnotearlierthanthat
ofthedebentures;or
(ii)bygovernmentorpublicauthoritiesannuities.
(2)Suchsecuritiesshallhedepositedillabankandsuchpartofthean.
nuitiesshallbeblockedinabankuptothetimeofrepaymentasisne.
cessarytomeetpaymentsofinterestandamortisation.
(3)Theprovisionsofsub.art.(I)shallnotapplytorealestateloanor
agriculturalmortgagecompanies.
Art.431.
-
Reductionofcapitalwherethere(Iredebentures.
Acompanywhichhasissueddebentureslllayonlyreduceitscapitalinpro.
portiontothedebenturesredeemed.Whereareductionofcapitalisneces.
saryowingtolosses,theamountofthelegalreserveshallcontinuetobe
calculatedonthebasisofthecapitalexistingatthetimeofissueforsolong
asthecapitalandthelegalreservearelessthanthevalueoftheunredeemed
debentures.
Art.432.
-
Premiumbondsandbondsatadiscount.
(1)Bondsmaybeissuedatapricegreaterthantheirparvalue.
(2)Bondsmaynotbeissuedatapricelowerthantheirparvalueexcept
inaccordancewithspeciallaws.
Art.433.
-
Contentsofdebenturecertificates.
Debenturecertificatesshallbeissuedfromacounterfoilregisterandshall
show:
(a)the.company'sname,itsobjects,theheadofficeofthecompany,and
theplacewherethecompanywasregistered:
(b)whenthecompanywasformedandforhowlong;

106. COM~IERCIAL CODE 93
(c)thepaid-upcapitalonthedateofissue;
(d)thedateofresolutionofthegeneralmeetinganditsentryintheregister;
((')the,-erialnumberandnominalvalueofthecertificate,therateand
daleofinterestpaymentsandthetermsforredemption;
(f)theamountoftheissueandthespecialgum'anteesattachingtothede-
benturesandthedateofthedeedsettingupsuchguarantees;
(g)
theamountofdebenturesorloanstockissuedpreviouslyandnotamor.
tised,indicatingtheguaranteesattachingthereto;
(h)whercappropriate,theperiodorperiodsoftimewithinwhichdeben.
tureholdersmayconverttheirdebenturesintoshares,andtheprovi-
sionsforsuchconversion.
Art.434.
-
Applicationofprovisionsrelatingtoshares.
TheprovisionsofArt.318,319,325,328,329,340and341ofthisCode
shallapplymutatismutandistodehentures.
Art.435.
-
Debentureholders'meetings.
(1)Holdersofdebenturesofagivenissuemaycombineasalegalperso-
nalitytoprotecttheircommonintel'estsasprovidedhereinafter.
(2)Notwithstandinganyprovisiontothecontrary,debentureholderswho
havecombinedundersub-art.(1)mayatanytimemeetingeneral
meeting.
Art.436.-Callingofdebentureholders'meetings.
(1)Ameetingofdebentureholdersmaybecalledbythecompanyorbythe
representativeofthedebentureholders,ifany.
(2)Ameetingmayalsobecallcdbydebentureholdersrepresentingone
twentiethoftheissuedandunrcdeemeddebentures.
(3)TheprovisionsofArt.388etseq.relatingtothecallingandholding
ofshareholders'mectingsshallapplymutatismutandistothecalling
andholdingofdebentureholders'meetings.
(4)Directors,auditorsoremployeesofthecompanyhavingissueddeben-
turesorofeompanieshavingguaranteedsuchissuemaynotrepresent
debentureholdersingeneralmeetings.
(5)Holdersofdebentureswhichhavebeenamortisedandredeemedmay
nottakepartinmeetings.
(6)Thecompanywhichhasredeemeddebenturesmaynottakepartinthe
debentureh:>lders'meetingbyreasonofthedebenturesitihiasredeemed.

107. 94 COMMERCIAL CODE
Acompanywhichholdsmorethan30percentofthecapitalofthecom-
panywhichhasissuedthedebenturesmaynottakepartinthedebenture
holders'meeting.
(7)Thecallingandholdingofgeneralmeetingsofdebentureholdersshall
beattheexpenseofthedebtorcompany.
Art.437.-Businessofdebenturesholders'meetings.
(1)Resolutionsadoptedbydebentureholders'meetingsbindalldebenture
holders,whetherabsent,dissentingorincapable.
(2)Meetingsmayadoptresolutionstoprotecttheinterestsofdebenture
holders,toenforcetheloanagreementandtoprovideforallnecessary
expensesinconnectiontherewith.
Art.438.-Decisionsonproposalsbythecompany.
(1)Themeetingmayalsoconsiderproposalsofthedebtorcompanyrelat-
ingto:
(a)modificationsinthestructureofthecompany;
(b)amalgamationwithanothercompany;
(c)i&sueofdebentureshavingpriorityoverexistingdebenture.
(2)Thecompanymayenforceproposalsundersub-art.(1)nOh'l'ithstand-
ingthatthedebentureholders'meetingdoesnotapprovesuchpro-
posals:Providedthatthecompanyshallinsuchacaseredeemwith-
inthreemonthsfromsuchproposalshavingbecomeeffectivethede.
.
bentllresofsuchdebentureholdersasmaysorequest.
(3)Themeetingmayalsoconsiderproposa~relatingtovariationsinthe
termsoftheloan.
(4)Themeetingmaynotincreasetheliabilityofthedebentureholdersby
imposingadditionalpaymentsoragreetotheconversionofdebentures
intoshares,exceptbyanunanimousvote,norprovidefordifferential
treatmentamongstthedebentureholders.
Art.439.
-
Conditionsforthevalidityofdecisions.Quorum.
(1)Ameetingmaytakedecisionswhereitsmembersrepresentnotless
thanone-thirdofthedebentureswhichmayberepresented.
(2)FormatterstobedecidedunderArt.438,thequorumshallbethree-
quarters.
(3)Wherethequorumundersub-art.(1)and(2)isnotattainedatthe
firstmeeting,asecondmeetingshallbecalledinthesamemannerand
withinthesameperiodoftime.Thenoticeofcallingshallcontain

108. COMMERCIAL CODE 95
thesameagenda,showingthedateoftheabortivemeeting.The.second
meetingmaymakedecisionsregardlessofthequorumpresent.
(4)FormatterstobedecidedunderArt.438,whereaquorumofone-
hallisnotattainedatthesecondmeeting,afurhtermeetingshallbe
calledinthesamemannerandwithinthesameperiodoftime.Such
meetingmaymakedecisionswhereone-quarterofthedebent1ue8a:re
presentorrepresented.
Art.440.-Majority.
(1)Resolutionsshallbeadoptedbysimplemajority.
(2)ResolutionsunderArt.438shallbeadoptedbyatwo-thirdsmajority.
(3)Thevotingrightsofdebenturesahallbeinproportiontotheshareof
,theloanwhichtheyrepresentrespectively,eachdebenturegivingthJ
righttonOtlessthanonevote. '
Art.441.
-
Confirmationofcertaindecisions.
(1)AresolutionadoptedunderArt.438shallbesubmittedtothecourt
forconfirmationwithinfifteendaysfromthemeetingbythecompa-
ny,therepresentativeofthedebentureholdersorbyadebentureholM
der.Indefaultofsubmission,the:resolutionshallbeofnoeffect.
(2)Debentureholderswhodissentedorwereabsentmayopposetheconfir.
mationoftheresolution.
Art.442.
-
Agentofdebentureholders.
(1)Debentureholdersmayberepresentedbyoneormoreagentswhoshall
benominatedorremovedbyageneralmeetingofdebentureholders
havingth~quorumspecifiedinArt.439(1)and(3)andamajority
asspecifiedinArt.440(1).
(2)ThesamequorumandmajorityshallberequiredforadecisiononthE:r
remunerationandpowers.Remunerationshallbebomebythedebtor
company.
(3)Theagentsofthedebentureholdersmay,incaseofurgency,beap-
pointedorreplacedbythecourtontheapplication<:;'thedebtorcom-
panyintheabsenceofappointmentsmadebyaproperlyconstituted
generalmeeting,orontheapplicationofoneormore{~ebenturehoI.
dersholdingnotlessthanonetwentiethofthedebenturesissued.
(4)TheprovisionsofArt.436(4)shallapplytotheappointmentofan
agentofthedebentureholders.

109. 96 COMMERCIAL CODE
Art.443.
-
Powersofagents.
(I)Unlessotherwiseprovidedbythegeneralmeetingofdebentureholders,
agentsofthedebentureholdersmaydoallthingsnecessaryinthe
interestofthedebentureholders,andinparticularacceptandpreserve
securitiesguaranteeingtheloan.
(2)Theyshallrepresentthedebentureholdersinalllegalproceedings.
(3)Theymaytakepartinshareholders'generalmeetings.
(4)Theyshallbepresentatthedrawingofdebenturesforredemption.
Art.444.
-
Dutiesintheeventofthebankruptcyofthedebtorcompany.
(I)Wherethedebtorcompanyisadjudgedbankruptorentersintoasche.
meofarrangement,theagentofthedebentureholders,ifany,shall
proveforalldebentureholdersthereof.Heshallreceiveontheirbe-
halfallnoticesofmeetings.
(2)Theagentofthedebentureholdersmay,ifsoauthorisedbythegene.
ralmeetingofdebentureholders,voteatcreditors'meetingsonbehalf
ofallthedebentureholders.Incalculatingthequorumandmajor~ty,
ulldebenture"issuedonthesamedateshallbedeemedtoconstitUiteone
debt.
Chapter6.Accountsofcompanies
Art.445.-Generalprovisions.
Unlessotherwiseexpresslyprovidedbylaw,theprovisionsofthisCoderela.
tingtocommercialLooksandhcok-keepingshallappIytotbeaccountsof
,;.;.lwrcpOil1panies.
Art.446.
-
Accounts.Annualreport.
(J)Attheendofeachfinancialyear,thedirectorsshallprepareadetailed
inventoryandvaluationofassetsandliabilities.
(2)Theyshalldrawupabalancesheetandaprofitandlossaccountand
prepareareportonthestateofthecompany'sactivitiesandaffairs
duringthelastfinancialyear.
(3)Thereportshallgivedetailedinformationontheprofitandlossaccount,
ancxactstatementofthetotalamountofremunerationofthedirectors
andauditors,andproposalsforthedistributionofdividends,ifany.
Art.447.
-
Submissionofaccountsandreporttotheauditors.
Theinventory,balancesheet,profitandlossaccountandthedirectors'reo
portshallbesubmittedtotheauditorsandtheMinistryofCommerceand

110. COMMERCIAL CODE 97
Industrynotlessthanfortydaysbeforethenoticescallingtheannualgene-
ralmeetingaredespatched.
Art.448.
-
Drawing-upofthebalancesheetandprofitandlossaccount.
(1)Thcbalancesheetandprofitandlossaccountshallbepreparedeach
yearinthesameformasinprecedingyearsandthemethodsofvalua-
tionshallremainthesame,unlessthegeneralmeetingadoptsvariations
inthemodeofpresentationoftheaccountsorthemetlhodsofvalua.
tiononthereasonedadviceoftheauditors.
(2)Theprofitandlossaccountshallshowunderseparateheadslossesor
profitsarisingoutofthecompany'svariousactivities.
Art.449.
-
Annexures.
Areturnofliabilitieswhichdonotappearinthebalancesheet,suchas
guarantees,shallbeannexedtothebalancesheet.
Art.450.
-
Amortisationandallowances.
(1)Provisionsforamortisationshallbemadeeachyearsothattheitem
tobeamortisedbewrittenoffattheendofitsperiodofuse.Where,
duringthepeoriodofamortisation,therateprovesinsufficient,such
rateshallbeincreasedsothattheamortisationcorrespondstothede-
preciation.
(2)Provisionsshallbemadeforamortisationandallowancesfordeprecia-
tionofassetsattheendofeachfinancialyear,evenwherethereare
noprofits.
(3)Thecostsofcapitalissuesandincreasesshallbeamortisednotlater
thanontheexpiryofthefifthfinancialyearfollowingthatduring
whichsuchissueorincreasewasmade.
Art.451.
-
Accountsofholdingcompanies.
(1)Whereacompanyisaholdingcompany,theaccountsofitssubsidiar-
iesshallbesubmittedtotheam1ualgeneralmeetingatthesametime
andintlhesamemannerasitsownaccounts.
(2)Aconsolidatedbalancesheetandprofitandlossaccountshallbeprepa-
redinrespectoftheholdingcompanyanditssubsiJiaries.
(3)Theprovisionsofsub-art.(2)shallnotapplywhere,hedirectorsare
ofopinionthatthedrawingupofsuchbalancesheetwouldbeimprac.
ticableortooonerous,oroflittleconcerntotheshareholdersonaccount
ofthesmallfinancialinterestsinvolved.
(4)Theprovisiomofsub-art.(2)shallnotapplyiftheMinistryofCom-
merceandIndustryapproves,wherethedirectorsoftheholding001)1-
8*

111. 98 COMMERCIAL CODE
panyareofopinionthatthedrawingupofsuchbalancesheetcould
prejudicethecompanyoritssubsidiaries,orthatthecompanyandits
subsidiariescarryoutbusinessofsuchadifferingnaturethattheymay
notreasonablybedeemedtoformasingleenterprise.
Art.452.
-
Profits.
(1)Thenetprofitscomprisethenetreceiptsforthefinancialycarafterde-
ductionofgeneralcostsandothercharges,andofamorlisatioaand
allowances.
(2)Theprofitfordistributionistheprofitforthefinancialyearlesspre-
viouslossesandplusadditionalrevenueandanydistributionfromthe
reservefundsspeeiallyapprovedbythegeneralmeeting.
(3)Thegeneralmeetingshallspecifythereservefundsfromwhichprofit
fordistributionmaybetaken.
Art.453.
-
Reservefunds.
(I)Transferstoreservefundsshallbemadefromthenetprofitsshown
intheprofitandlossaceount.
(2)Reservefundsshallbeasfollows:
(a)thelegalreserverequiredbylaw;
(b)thesupplementaryreservecreatedbyanordinarygeneralmeeting
inaccordancewiththearticlesofassociation;
(c)optionalreservecreatedbyanordinarygeneralmeetinginaccor-
dancewiththearticlesofassociation;
(d)freereservecreatedbyanordinarygeneralmeetingtherebeingno
spccialprmisioninthela\orarticlesofa,;so(';8tiOI1.'
(3)Unlessotherwiseprovidedinthearticlesofassociation.reservcfunds
shallnotbearinterest.
Art.454.
-
Legalreservefund.
(I)Notlessthanonetwentiethofthenetprofitsshallbetransferredeach
yeartothelegalreservefunduntilitamountstoone-fifthofthecapital.
(2)Transfersshallbemadetothelegalreservefundwhereithasfallen
belowtheamountfixedinsub-art.(I).
Art.455.
-
Reservecreatedbyissuepremiums.
(I)Whereanextraordinarygeneralmeetinghasapprovedanincreasein
capital,theissuepremiumsmaybetransferredtoareservefund.

112. COMMERCIAL CODE 99
(2)Onlyformerandnewshareholdersmayshareinthedistributionof
suchreserve.
Art.456.-Allocationanddistributionofprofits.
(1)Distributionofprofitsshallbeeffectedaftertransfertothelegalreser-
veasprovidedinArt.454.
(2)Unlessotherwiseprovidedbylaw,thebalanceshallbedistributedin
accordancewiththearticlesofassociation.
(3)Paymentstodirectorsshallbemadeinaccordancewiththeprovisions
ofArt.353.
Art.457.
-
FixedaTinteriminterests.
(1)Thearticlesofassociationmayprovidethatafixedorinteriminterest
shallbepaidtoshareholdersevenwheretherearenoprofits.
(2)Suchinterest,inafixedamount,shallbecarriedtothedebitofthe
installationaccount.Itmayonlybeprovidedforduringtheperiodof
preparatoryworksandconstructionoftheenterpriseandshallceue
tobepayableassoonasnormalbusinessbegins.Thearticlesof8880-
ciationshall,withintheselimits,specifythedatewhensuchinterest
shallceasetobepaid.
(3)WherethearticlesofassociationprovideforafixedorinterimiDtere8t
asdefinedinsub-art.(1)and(2),suchinterestshallnotbepaidunless
thearticlesofassociationhavebeenpublished.
Art.458.-Paymentofdividends.Rightsofsluzreholders.
(1)Dividendsmayonlybepaidtoshareholdersfromnetprofitshownin
theapprovedbalancesheet.
(2)Dividendsdistributedcontrarytotheprovisionsof&oo.art.(1)shallbe
treatedasfictitiousdividendsandthepersonsmakingthedistribution
shallbecriminallyandcivillyliable.
(3)Thedateandmethodsofpaymel1ltofdividendsshallbedecidedbythe
generalmeeting.
(4)Uptothedatefixedforpayment,thegeneralmeetingmayforgood
reasonvaryorcanceldecisionsofaprecedinggeneralmeetingconcern-
ingthedistributionofdividendsorreserves.
(5)Ashareholdershallbecomeacreditorofthecompanyfortheamount
ofthedividendfromthedatefixedforpayment.
Art.459.-Claimingbackafdividends.
DividendsdistributedcontrarytotheprovisionsofArt.458maynotbe
claimedbackfromtheshareholders,exceptint:hecaseoffamilycompanie8

113. 100 COMMERCIAL CODE
orwheredistributionwasmadeintheabsenceofabalancesheetornotin
accordancewiththeapprovedbalancesheet.
Art.460.
-
Effectofapprovalofthebalancesheet.
Theapprovalofthebalancesheetbythemeetingshallnotaffecttheliabi-
lityofdirectors,auditorsorgeneralmanagersinrespectoftheirmanage-
ment.
Art.461.
-
Publicationofthebalancesheet.
Withinthirtydaysoftheapprovalofthehalancesheet,acopythereoftoge-
therwiththerelevantminuteofapprovalbythemeetingshallbesentby
thedirectorstotheMinistryofCommerceandIndustryforpublicationin
theOfficialCommercialGazette.
Chapter7
Amendmentstothememorandumorarticlesofassociation
Art.462.-Applicationofgeneral",res.
(1)Extraordinarymeetingscalledtovoteonamendmentstothememoran.
dumorartic:esofassociationshallconduCttheirbusinessinaccordan-
cewithtIleprovisionofArt.388-416and422-425.
(2)Resolutionsshallbepublishedinaccordancewiththeprovisionsof
Art.224.
Art.463.-Rightofwilhdrawalfromthecompany.
(1)Shareholderswhodissentfromresolutionsconcerninganychangein
theobjectsornatureofthecompanyorthetransferoftheheadoffice
aIn-oadmaywithdrawfromthecompanyandhavetheirsharesredeem.
ed,attheaveragepriceonthestockexchangeoverthelastsixmonths.
Wherethesharesarenotquotedonthestockexchange,theyshallbe
redeemedatapriceproportionatetothecompany'sassetsasshownin
thebalancesheetfOl'thelastfinancialyear.
(2)Whereshareholderswishtowithdrawundcrsub-art.(1),theyshall
notifythecompanybyregisteredletter:
(a)withinthreedaysfromthemeeting,wheretheyhavetakenpart
insuchmeeting;or
(b)wheretheywerenotpresentatthemeeting,withinfifteendays
fromthepublicationofthe:resolutionintheOfficialCommercial
Gazette.
(3)TheprovisionsofthisArticleshallapplynotwithstandinganyprovision
tothecontraryinthearticlesofassociation.

114. COMMERCIAL CODE 101
Art.464.-lrzcreseofcapital.Procedure.
(1)Thecapitalmaybeincreasedhytheissueofnewsharcsorhyanin.
creaseintheparvalueofexistingshares.
(2)Newsharesissuedmayeitherbepaidup:
(a)incash;
(h)hypayingoffcurrentdehtswithshares;or
(c)hycapitalisationofreservesorotherfundsatthedisposalofthe
company;or
(d)byconversionofdebenturesintoshares.
(3)Anincreaseofcapitalhyincreasingtheparvalueofsharesmayonly
heeffectedunderArt.425(2)wheresuchincreaseisnotpaiduphy
capitalisationofreservesorotherfunds.
Art.465.
-
Delegationofpowerstodirectors.
(1)Anextraordinarygeneralmeetingmayhyresolutiondelegatetothe
directorsallpowerstoeffecttheincreaseofcapitalapprovedbythe
meeting.
(2)Anyprovisioninthememorandum orarticlesofassociationdelegat-
ingsuchpowersinadvancetothedirectorsshallbeofnoeffect.
Art.466.
-
Periodforeffectinganincreaseofcapital.
AresolutionofageneralmeetingtoincreasethecapitalunderArt.465
shallbecomeofnoeffectifnotcarriedoutwithinfiveyearsunlessthe
increaseishyconversionofdebentures.
Art.467.-Capitaltobefullypaidbeforeanewissue.
Whereacompanywhosecapitalisnotfullypaidincreasesitscapitalby
anewissueofsharestohepaidupincashorofconvertibledebentures,
suchissueshallhenullandvoid.
Art.468.-Conditionsfortheissueofnewshares.
Unlessotiherwiseprovidedbr!dW,acompanymayonlyissuenewsharesin
accordancewiththeprovisionsrelatingtotheformationofsharecompa-
mes.
Art.469.
-
Subscriptionwithollertothepublic.
Wherenewsharesareofferedforpublicsuhscription,theoffertothesuh.
scribersshallhehyprospectussignedbyarepresentativeofthecompany.
Theprospectusshallshow:
(1)thedateofregistrationofthecompanyinthecommercialregister;
(2)thecompany'snameandheadoffice;

115. 102 COMMERCIAL CODE
(3)theexistingamountandcompositionofthecapital,showingtheva-
riouskindsandclassesofshares,theirparvalueandpreferencesat-
tachingthereto;
(4)themanagersandauditors;
(5)thelastprofitandlossaccount,balancesheetandauditors'report;
(6)dividendspaidduringthelastfiveyearsorsinceformation;
(7)dehentureloansissued;
(8)thedecisionofthegeneralmeetingregardingthenewshares,showing
inparticularthetotalamount,theirnumber,parvalue,natureand
issueprice;
(9)contributionsinkindandspecialhenefitsallocated;
(10)theperiodfromwhichthenewshareswillgivetherighttoadividend
andanyrestrictionsregardingsuchright,aswellasanypreference
accorded;
(11)thedateuptowhichthesubscriberisbound.
Art.470.--Preferredrightofsubscription.
(1)Shareholdersshallhaveapreferredrightofsubscriptionofnewcash
shares,inproportiontothenumberofsharesheld.
(2)Thisrightmaybetransferredorassignedunderthesameconditions
astheshareitself,duringtheperiodofsubscription.
(3)Thisrightmaynotbeexercisedintheeventofconversionofdeben-
turesintoshares.SharehQldersshallrenouncesuchrightunderthe
provisionsofArt.474,atthetimeofissueofdebenturesconvertible
intosharesatthewilloftheholders.
Art.471.-Rightsofreducedsubscription.
Whereanyshareholdemhavenotsubscribedsharesinrespectofwhichthey
hadapreferredright,thesharesshallbeallocatedtothoseshareholders
havingappliedforagreaternumberofsharesthantheywouldhavebeen
entitledtoundertheirpreferredright,suchallocationbeingproportional
totheirshareinthecapitalandwithinthelimitsoftheirapplications.
Art.472.-Allocationoftheremainder.
Wher€;preferredallocationsandthereducedallocationsprovidedinArt.
471havenottakenupthewholeoftheincreaseofcapital,thebalance
shallheallocatedina""ordancewiththedecisionsofthegeneralmeeting.

116. COMMER~lAL CODE 103
Art.473.
-
Exceptionstothepreferredright.
(1)ThegeneralmeetingwmohresolvesaninCre&IIeofcapitalmayalso
resolvethatthepromOl1llofArt.470,471and472shallnotapply,
;.;"wholeorinpart,butafterconsidering:
..:.~ -
'~''!Jadirectors'reportgivingrea8OII8fortheincreaseofcapitaland
thesettingasideofthepreferredrightofsubscription,theallottees
ofthenewshares,thenumberofsharesallocatedtoeach,theissue
priceandthebasisfordeterminingsuchprice;and
(b)anijuditors'reportcertify,ingthecorrectnessofthedirectors'report.
(2)Anyallotteesofnewsharesmaynotvoteinpersonorbyproxyat
amettingwhichsetsasideintheirfavourtheapplicationof'thepr0-
visionsofArt.470,471and472.
(3)Thequorumandmajorityrequiredforsuchdecisionshallbecalcu.
latedonthewholeoftheeharesmakingupthesharecapitalbuttothe
exclusionoftheshanlsheldorrepresentedbySuobi111ottees.
Art.474.
-
Issueofconvertibledebentures.
(1)Theissueofconvertibledebenturesissubjecttn~hepriorapprovalof
'anextraordinarygeneralmeeting.
(2)SuchapprovalrequiresexpreMrenunciationbytheshareholdersofthe
preferredrightof311b$criptionofthesharestobeissuedundersuch
conversion,forthebenefitoftheholdersoftheconvertibledebentures.
(3)Thedirector~'reportrequiredunderArt.437(1)(a)shallgiverea.
sonsfortheissueandtheperiodoftimewithinwhichtheoptiongran.
tedtothedebentureholdersshallbeexercised,andthemannerofcon-
version.
(4)Theauditorsshallprepareaspecialreportonthepropoaa1ssubmitted
tothemeetingasregards,themannerofconversion.
Art.475.-DocumentsconferringspeciGlpreferredrightsprohibited.
Nodocumentsconferringapreferredrightofsublleriptionmaybeissued.
Art.476.-PeriodsoftimefOTtheuerciseoftherightofIJ11.hlCription.
Theperiodoftimewithinwhichshareholdersmayexercisetheirrightof
subscriptionmaynotbe1-thanthirtydaysfromtheopeningofthemb-
scription.

117. 104 COMMERCIAL CODE
Art.477.-Publicationofnoticesofsubscription.
(1)Thedateofapeniagelasab8criptionsbaIlbenotifiedtoshareholders
byaDOtioepublishedintheOfficialCommercialGazetteandinanew-
spaperempoweredtopubliahlegalnoticescirculatingattheplacewhere
theJJe8dofficeissituate,tendaysbeforethesubscripionlistopens.
Suchnoticeshallindicatetoshareholderstheirpreferredright,theda-
tesofopeningandcbingofthesubscriptionlistandtheissueprice
ofthe8bareeandtheamounttobepaid-up.
(2)WJJereaUthesharesareregisteredshares,theshareholdersmaybe
notifiedbyregisteredlettertendaysbeforethesubscriptionlistopens.
Art.478.-Subecriptiolt.ofnewshmes.
(1)Anapplicationtosubscribeisnoteffectiveunlessaccompaniedbythe
amounttobepaidonsubscription.
(2)WhereincreasesofcapWilareeffectedbytheissueofcashshares,the
pl'Ov»ionsofArt.312(3)and319-324shallapply.
Art.479.-Declarationofsubscription.
Thedirectorsshallkeeparecordshowingthat:
(a)thenewshareshavebeenfullysubscribed;
(b)theamountstobepaiduphavebeenpaid;
(c)theauthorisedincreaseofcapitalhastakenplace;and
(4)thenecessaryamendmentatothearticlesofassociation
effected.
havebeen
Art.489.-Increaseofcapitalbycontributioninkind.
TheprovisionsofArt.315,321and322ofthisCodeshallapplytoincreases
ofcapitaleffeoted.bycontributionsinkindorwhichcarryspecialbenefits.
Art.481.-Paymentbysetoff.
(1)NewcashshareswhichformthewholeorpartofaDincreaseofcapital
mayheusedtopayolfthecurrentliquiddebtsofthecompanyatthe
date1!hesubscriptionlistopens.
(2)Anaccountshowingthesettlementofthedebtshallbedrawnupbythe
directorsandcerltifiedascorrectbytheauditorswhoshallpreparea
reportshowingthevalueofthedebtsosettled.
Art.482.-CapitalisationofTeseTV~.
SubjecttotheprovisionsofArt.454(2),anextraordinarygeneralmeeting

118. COl\1I\1EHCIAL COilE 105
maydecidetoinI'TI'a.<cthecapitalhytransferringtheretothewhole01'part
ofthereservesandtovarythearticlesofa~sociationaccordingly:Provided
that,wherethelegalreserveissotransferred,nodistributiontosharehol(le~
maybemadeuntilthelegalreserveisrestored
Art.483.
-
Amortisationofcapital.
(1)Onlythearticlesofassociationoraresolutionofanextraordinarygene-
ralmeeetingmayauthoriseamortisationofcapital.
(2)Onlyprofitsandreservesotherthanthelegalreservemaybeusedfor
suchamortisation.
(3)Amortisationiseffectedbytheredemptionofshareswithinthesaml'
class.Thedateonwhichsharesshallberedeemedmaybeselectedby
drawings.
(4)Reductionofcapitalshallnotresultfromamortisation.
Art.484.
-
Reductionofcapital.
Proposalsforareductionofcapitalshallbesenttotheauditorsnotless
thanfifteendaysbeforecallingthemeetingtoapprovesuchrcduetioll.The
auditorsshallJ'eporttot]",meetingtheiropinionandthereasonstherefor
ontheproposals.
Art.485.
-
Reductionofcapitaltobepublished.
Whereareductionofcapitalhasbeeneffected,anentryshallbemadein
thecommercialregister
'Ind
publishedinaccordancewiththeprovisionsof
Art.224.
Art.486.
-
Reductionofcapitalfollowinglosses.
TheprovisionsofArt.487.490shallapplywhenlossesarethereasonfora
reductionofcapital.
Art.487.
-
Mannerofreduction.
(1)Areductionofcapitalshallbeeffected;
(a)byreducingtheparvalueofshares;or
(b)byexchangingoldsharesforalesser,numberofnewshares.
(2)Whereageneralmeetingresolvesthatareductionofcapitalshallbe
effectedasprovidedin(b),theshareholdersholdinganinsufficient
numberofsharestobeexchangedshallwithintheperiodfixedbythe
meetingmakeupthenumberofsharestoanumberwhichcanbe
exchangedordisposeoftheirsharestoanothershareholder.
Art.488.-Preservationorconferralofrightsonshareholders.
Ageneralmeetingmayinaresolutionauthorisingareductionprovidethat

119. 106
COMMERCIAL CODE
theshareholdersshallbepaidasacompeDllationforthereductionofthe
numberoftheirsharesoroftheparvaluethereofanamountcorresponding
tothereduction,beforeanydistributionofprofitsismadeinanyfinancial
year.
Art.489.
-
Rightsofcreditors.
Wheretheclaimofacreditorholdingrightspriortothepublicationofthe
reductionofcapitalisnotpaidorsuchcreditorisnotgivenadequategua.
ranteesforthepaymentofhisclaim,hemayopposetheadoptionofares0-
lutionunderArt.488oranydistributionofprofitsuntilthecapitalisresto.
redtotheamountexistingatthetimewhentheclaimoriginated.
Art.490.-Reductionofcapitalbelowtheminimumrequiredbylaw.
(1)Where,byreasonoflosses,thecapitalisreducedbelowtheminimum
permittedinArt.306(1),thecapitalshallbeincreasedtothemini.
mumrequiredinArt.306(1)withinaperiodofoneyearfromthe
dateofpublicationintheofficialcommercialgazetteinaccordancewith
theprovisionsofArt.485.
(2)NothinginthisArticleshallaffecttherightsofcreditorsunderArt.489.
(3)Wheretheincreaseofcapitalrequiredbysub.art.(1)isnoteffected
orthecompanyisnotreorganised,thedissolutionofthecompanymay
beorderedbythecourtupontheapplicationofanyint~edperson.
Art.491.-Reductionofcapitalnotmotivatedbylosses.
TheprovisionsofArt.492-494shallauplywherelossesarenotthereason
forareductionofcapital.
Art.492.
-
Equalityofshareholders.
Theequalityofshareholdersshallnotbeaffectedbyareductionofcapital.
Art.493.-Rightsofcreditors.
(1)Anycreditorholdingrightspriortothepublicationintheofficialcom.
mercialgazetteunderArt.485may,wherethereductionofcapitalis
inanamountexceeding1<0.%,objecttotheresolutionwithinthree
monthsfromsuchpublication.
(2)Thecourtmaydisallowsuchobjectionororderthecompanytopaythe
claimantortoprovideadequateguaranteesforpayment.

120. COMMERCIAL CODE 107
(3)Noreductionofcapitalmaybeeffecteduntiltheperiodspecifiedin
sub-art.(1)hasexpired.
Art.494.-Minuterecordingreduction.
(1)Whereareductionofcapitalhasbeeneffected,aminuteshallbeprc-
paredbythedirectorswithinonemonthandnotlaterthanoneyear
fromthedateofpublicationintheofficialcommercialgazetteaspro-
videdinArt.485.
(2)Theminuteshallbepublishedinthesametimeandmannerasdeci-
sionsofgeneralmeetingsamendingthearticlesofassociation.
Chapter8.DissolutionandWinding-up
Art.495.-Groundsfordissolution.
(1)Asharecompanymaybedissolvedforoneofthefollowingreasons:
(a)expiryofthelifeofthecompanyasfixedinthememorandumof
association,unlessextendedbyadecisionofanextraordinaryI!:("
neralmeeting;
(b)completionoftheventureforwhichthecompanywasformed;
(c)failureofthepurposeorimpossibilityofperformance;
(d)voluntarydissolutionresolvedbyanextraordinarygeneralmeeting;
(e)dissolutionbyorderofthecourtforgoodcauseontheapplication
ofamember;
(f)subjecttotheprovisionsofArt.311,acquisitionofallthesharesby
amember;
(g)inst~tutionofbankruptcyprooeedings;
(h)loseoftihree-quartersofthecapital.
(2)Anextraordinarygeneralmeetingshallbecalledtoconsidervoluntary
dissolutionorthecontinuationofthecompanywherethree-quartersof
thecapitalhavebeenlostasprovidedinsub-art.(1)(h).
(3)Wherethedirectorsorauditorsfailtocallageneralmeetingoragene-
ralmeetingcannotberegularlyheld,thecourtmay,ontheapplica-
tionofanyinterestedparty,orderdissolution.
Art.496.-Appointmentandremovalofliq!lidators.
(1)Wheretheappointmentofliquidatorsisnotprovidedforinthememo.
randumorarticlesofassociation,theyshallbeappointedbythegene-
neralmeetingwhichresolveddissolution.

121. 108 COMMERCIAL CODE
(2)Whereliquidatorsareno!appointedundersub-art.(1),theymaybe
appointedbythecourtontheapplicationofthemembers,directorsor
auditors.
(3)Theappointmentofliquidatorsmayberevokedbythegeneralmeeting
orbythecourtforgoodcauseontheapplicationofmembersoraudi-
tors.
(4)Appointmentofnewliquidatorsshallbemadeasprovidedinsub-art.
(1)and(2).
Art.497.-Survivalofthecompanyduringwinding-up.
(1)Untilwinding-upiscompleted,thecompanyshallretaini,tslegalper.
sonalityandname,towhichthewords"inliquidation"slUinbeadded.
(2)Duringwinding-up,1Jheorgansofthecompanyshallrestricttheiractio
vitiestoactsnecessarytofacilitatethewinding-upandwhicharenot
actswithinthescopeoftheliquidators.
Art.498.-Bankruptcyandwinding-up.
(1)Whereacompanyisdeclaredbankrupt,thewinding-upshallproceed
undertheprovisionsofBookVofthisCode.
(2)ThedM-ectors'powersshallberestrictedtorepresenrtingtJhecompanyif
necessary.
Art.499.-Dutiesandliabilityofliquidators.
(1)UDilessotherwiseprovidedbylaworthearticlesofassociation,theliqui-
datorsshallhavethesamedutiesandliabilitiesasdirectors.
-
(2)TheliquidartorsshalltakepoII8CS8ionofthepropertyandbooksofthe
company.'UhedirectorsshallprepareIireportfordIeliquidatorson
themanagementofthecompanyfromtheendofthelastfinanclalyear
tothedateofthewinding-up.
(3)Theliquidatorsanddirectors'shalljointlyprepareandsignaninven.
toryofassetsandliabilities.
(4)When,theassetsappNrtoheiDBuHicienttocoverthedebtsofthe
company,theliquidatorssh8llJ.oaUuponthememberstopayaccord-
ingtotheirshareholdingsuchinstalmemaasmaybedueontheir
shares.
Art.500.-Powersofliquidators.
(1)Suhjeqttoanylimitationsimposedbythearticlesof888OCiationorby
themeetingappointingt!hem,liquidatorsshallib.avefullpQWers.

122. COMMERCIAL CODE 109
liquidatorsmaysellthepropertyofthecompanyaswhole,compro-
miseandarbitrateand",hallrcpre,entthecompanyinlegalproceed-
ings.
(2)Theymaynotundertakenewbusiness,unlessrequiredfortheexccu-
tionofcontractsstillrunningorwheretheinterestsofthewinding-up
sorequire.Theyshallbepersonally,jointlyamIseverallyHableinres-
pectofanybusinessundertakenoutsidethclimitsprovidedinthisAr-
ticle.
Art.501.-Prohibitionfromdi8triblllil1{iaswtsamong111"nlbersbeforefull
paymentofdebts.
Untilthecreditorsofthecompanyhavebeenpaidorprovisionsforpayment
made,theliquidatorsmaynotdistributeanypartoftheassetsamongthe
members.
Art.502.
-
Callingoncreditors.
(1)Creditorsshallbepaidonthebasisofahalancesheetpreparedbythc
liquidatorsassoonastheyareappointed.
.
(2)Creditorsshallbeinformedofthedissolutionofthecompanyandrequi-
redtofiletheirclaimswithsuppmtingvouchers.
(3)Creditorsappearinginthecompany'sbooksorwhoareotherwiseknown
shanbenotifiedbyregisteredletter.Noticetoothercreditorsshallbe
givenbynotice,publishedinthreesuccessivemonthlyissuesofthe
officialcommercialgazetteandintheformlaiddowninthearticlesof
association.
Art.503.
-
Protectionofcreditors.
(1)Whereknowncreditorshavefailedtofilethcirclaims.theamounts
owingtothemshallhepaidintocourt.
(2)Sumsshallbesetasidetomeetclaimsinrespectofundertakingsofthe
companywhicharenotcompletedordisputedclaimswherethecredi-
torshavenotheenguaranteedordistribntionofassetshasnotbeen
postponeduntilsuchundertakingsarccompleted.
Art.504..
-
Finalbalancesheet.
(1)Afterpayingthecompany'sliabilities,thcliquidatorsshallpreparea
finalbalance1!beet,showingwhatpercentageoftihesurplusassetsj"av-
ailablefordistributiononeachshare.
(2)Subject'totheprovisionsofthearticlesofassociation,theliquidators
shallcalculatethepercentageundersub-art.(1)havingregardtowhe-

123. no COMMERCIAL CODE
thershareshavebeenfullypaidupandtopreferentialrightsattaching
toshares.
(3)Thebalancesheetsignedbytheliquidatorsandtheauditors'sreport
shallbedepositedintheMinistryofCommerceandIndustry.
(4)Anyshareholdermay,withinthreemonthsfromthedepositofthefi-
nalbalancesheetundersub-art.(3),applytothecourttosetasidethe
finalbalancesheet.Suchapplicationshallbeheardaftertheperiod
ofthreemonthshasexpiredand,wherethereareseveralapplications,
theyshallbeheardtogether.Thecourt'sdecisionshallbebindingon
allmembersandshareholdersofthecompany.
(5)Wherenoapplicationhasbeenmadewithinthreemonths,thefinalba-
lancesheetshallbedeemedtobeapproved.
Art.505.-Suspensionofdistribution.
Thesurplusassetsshallnotbedistribtuedtotheshareholdersuntiloneyear
fromthethirdpublicationspecfiedinArt.5,02(3)intheofficialcommer-
cialgazette:
Providedthatthecourtmayorderthedistributionofthesurplusassetsbe-
foretheexpiryofthisperiodwhensatisfiedthatthecreditorswillnotsuf-
fer.
Art.506.
-
Depositofamountsuncollected.
Whereashareholderhasnotcollectedthepercentageofthesurplusassets
duetohimwithinthreemonthsfromthedepositmentionedinADt.5'04(3),
theliquidatorsshandepositsuchsuminaspecialaccountintheStateBank
ofEthiopiatogetherwiththenameoftheshareholderorthenumbersofthe
shares,iftheyaretobearer.
Art.507.
-
Striking
offthecommercialregister.
Whenthefinalbalancesheethasbeenapproved,theliquidatorsshallmake
anapplicationfortheregistrationofthecompanytobecancelledinaccor-
dancewiththeprovisionsofArt.226.
Art.508.
-
Rightsofcreditors.
(1)AfteractionhasbeentakenunderArt.507,creditorswhohavenot
beenpaidmayclaimagainsttheshareholdersinpersontotheextent
oftheirsharesinthesurplusassets.
(2)Creditorsmayclaimagainsttheliquidators,wheretheyhavenotbeen
paidowingtotheliquidators'negligence.
Art.509.-Preservationofthebooks.
(1)Thebooksofacompanywhichhasbeendissolvedshallbedeposited

124. COMMERCIAL CODE 111
withtheMinistryofCommerceandIndustrywheretheyshallbekept
fortenyears.
(2)Theyshallbeopentoinspectionafterpaymentoftheprescribedfee.
TITLEVII.PRIVATELIMITED COMPANIES
Chapter1.FormationandGeneralProvisions
Art.510.
-
Definitions.Nature.
(1)Aprivatelimitedcompanyisacompanywhosemembersareliableonly
totheextentoftheircontributions.
(2)Aprivatelimitedcompanyshallnothavelessthantwoormorethan
fiftymembersandisalwayscommercialinform.
(3)Thecompanyshallnotissuetransferablesecuritiesinanyform.
Art.511.
-
Reductionofthenumberofmembersbelowthelegalminimum.
Wherethenumberofmembersisreducedbelowtwo,orwheretheorgans
ofthecompanyceasetoexist,thecourtmay,ontheapplicationofamem-
beroracreditor,orderthedissolutionofthecompanyandmakesuchpro-
visionalordersasarenecessaryunlessthecompanymakesarrangementsto
oomplywiththelawwithinareasonabletime.
Art.512.
-
Capital.
(1)Thecapitalofaprivatelimitedliabilitycompanyshallnotbeless
than15,000Ethipiandollars.
(2)Theamountofashareshallnotbelessthan10Ethiopiandollars.
(3)Allsharesshallbeofequalvalueandamembermayholdmorethan
oneshare.
Art.513.
-
Prohibitedtransactiuns.
Aprivatelimitedcompanyshallnotundertakebanking,insuranceorany
businessofasimilarnature.
Art.514.
-
Designation.
(1)Aprivatelimitedcompanymayhavcafirm-namewhichmayindicate
thenatureofitsbusiness.
(2)Thefirm-nameshallbefollowedbythewords"Priv".t.eLimitedCom-
pany."
Art.515.
-
Particularsrequiredoncompanypapers.
Thefirm.nameasdefinedinArt.514(2)andtheamountofthecapital
ofthecompany!!hallappeal'onallcompanydocuments,invoices,publi-
cationsandotherpapers.
.

125. 112 COMMERCIAL CODE
Art.516.-Formation.
Thecompanyisinstitutedwhenthedeed,intheformofamemorandum
ofassociation,settingupthecompanyissignedbyallthemembersorhy
personsactingontheirbehalfandisauthenticated.
Art.517.
-
Termsofthememorandumofassociation.
Thememorandumofassociationshallshow:
(a)thenames,nationalityandaddressesofthemembers;
(b)thecompanyname,headoffice,andbranchesifany;
(c)thebusinesspurposesofthecompany;
(d)theamountorthecapital;
(e)thevalueofcontributionsmadebyeachmember;
(f)thevaluationofcontributionsinkind;
(g)astatementthatthecapitalisfullypaid;
(h)thenumberofsharesheldbyeachmember;
(i)theprocedurefordistributionofprofits;
(j)thenumberofmanagers,theirpowersandtheagents,ifany;
(k)thenumberofauditors,ifany;
(l)theperiodoftimeforwhichthecompanyisestablished.
Art.518.-Articlesofassociation.
TheprovisionsofArt.314shallapplytopriva,telimitedcompanies.
Art.519.
-
Contributionsinkind.
(1)Whereamembermakesacontributioninkind,thememorandum of
associationshallshowthenatureandthevalueofthecontribution,the
priceacceptedbytheothermembersandtheshareinthecapitalallo-
catedtothemember.
(2)Themethodofvaluationshallbedeterminedbythemembers.
(3)Membersshallbejointlyandseverallyliabletothirdpersonsforthe
valuationfixed.
(4)Whereitisshownthatacontributionhasbeenovervalued,thecontri-
butingmembershallmakegoodtheovervaluationincash.Members
shallbejointlyandseverallyliableforsuchpayment,notwithstanding
thattheywerenotawareoftheovervaluation.
Art.52,0.
-
Publicity.
(1)Thecompanyshallbemadeknowntothirdpartiesinaccordancewith
theprovisionsofArt.219-224ofthisCode.Thememorandumofasso-

126. COMMERCIAL CODE 113
ciationandthearticlesofassociation,ifany,shallbedeposited.
(2)Thenoticetobepublishedandtheapplicationforregistrationinthe
commercialregistershallcontaintheparticularsspecifiedinArt.517
(a).(h)and(j)
-
(1).
(3)TheprovisionsofArt.324shallapply.
Chapter2.Shares
Art.521.
-
Shareregister.
(1)Allsharesshallbeenteredinaregisterwhichshallshow:
(a)thenamesofthemembers;
(b)thevalueofallcontributionsmadebythemembers;
(c)alltransfersofshares;
(d)allamendmentstotheseparticulars.
(2)
Atthebeginningofeachcalendaryearalistcontainingthepraticu-
larsunder(a)and(b)ofsub-art.(1)shallbesignedbythemanagers
andsenttotheMinistryofCommerceandIndustry,unlessthemana.
gersdeclarethattherehasbeennochangesincethelastlistwasdepo-
sited.
(3)Themanagersshallbejointlyandseverallyliableforanylossoccasion-
edbyinaccuracyinthekeepingoftheshareregisterorlists.Thelists
shallbeopenforinspectionbythepublic.
Art.522.
-
Assignmentofs/w;res.
Assignmentsofsharesshallbeinwriting-andshanbeofnoeffectinreJa-
tiontothecompanyorthirdpartiesunlesstheyhavebeenenteredinthe
shareregister.
Art.523.
-
Assignementofsharesoutsidethecompany.
(1)Unlessotherwiseprovidedinthearticlesofassociation,thereshallbeDO
restrictiononthetransferofsharesbetweenmembers.
(2)Atransferofsharesoutsidethecompanyshallbeapprovedbyamajo-
rityofthemembersrepresentingatleastthree-quartersofthecapital,
unlessalargermajorityorunanimityisfixedintheart1desofassocia-
tion.
(3)Suchapprovalshallbeenteredinthecommercialregister.
(4)Theprovisionsofsub-art.(2)shallapp1yevenwherethecompanyis
inliquidation.

127. 114 COMMERCIAL CODE
(5)WhereexecutionisleviedOnamember'sshare,thepurchasershall
obtaintheconsentoftheothermembers.
Art.524.
-
Devolutionofsharesbywayofsuccession.
(1)Unlessotherwiseprovidedinthearticlesofassociation,thesharesof
adeceasedmemberdevolveuponhisheirs.
(2)Thearticlesofassociationmayprovidet!hiatamemberhastherightto
leavehissharestotheheirhewishes.
Chapter3.OrganisationoftheCompany
Art.525.
-
Management.
(1)Aprivatelimitedcompanyshallbemanagedbyoneormoremanagers.
(2)Wheretherearemorethantwentymembers,decisionsshaHbetaken
atmeetingsofthemembersandauditorsshallbeappointed.
(3)Wheretherearetwentyorlessmembers,themembersshallnotbe
boundbytheprovisionsofsub-art.(2).
Art.526.
-
Appointmentofmanagers.
Managers,otherthanmembers,maybeappointedbythemembersorbythe
memorandumorarticlesofassociationforsuchperiodasisconsidereddesir-
able.
Art.527.
-
Dismissalofmanagers.
(1)Amanagerappointedbythememorandumofassociationmayonlybe
dismesedbythemembersunderadecisiontakeninaccordancewith
theprovisionsofArt.536.
(2)Amanagerappointedbythemembersmaybedismissedinaecordance
withtheprovisionsofArt.535.
(3)Dismissalshallonlybeforgoodcauseacceptabletoacourt.Amanager
whohasbeendismissedshallforthwithandforeverceasetofunction.
Wherethecourtisofopinionthatadismissalwaswithoutgoodcause,
itmaygrantdamagestothemanagerwhohasbeendismissed.
.
(4)Notwithstandingtheprovisionsofsub-art.(3),thearticlesofassocia-
tionmaystipulatethatmanagersmayberemovedatthepleasureof
themembers,irrespectiveoftheformofappointment.
(5)Revocatoryproceedingsforduecausemaybebroughtbyanymember
individually.

128. COMMERCIAL CODE us
Art.528.
-
Powersofmanagers.
(1)Withinthelimitsoftheobjectsofthecompany,managersshallhave
fullpowers.
(2)Provisionsinthearticlesofassociationrestrictingthepowersofthe
managersshallbebindingonlyasbetweenmembersandmanagers.
Theyshallnotbindthirdparties,evenifproperlypublished.
Arl.529.
-
Manager'sremuneration.
Themanager'sremunerationshallbefixedbythemembers.Itlllayconsist
eit;herofafixedsalary,orofashareintheprofits,orboth.
Art.530.
-
Liabilityofmanagers.
Inaccordancewithcivillaw,managersshallbeliableindividuallyorjointly
andseverally,asthecasemaybe,tothecompanyandthirdpartiesforany
breachoftheirdutiesunderthisCodeorthearticlesofassociation.
Art.531.
-
Bankruptcyofthecompany.
(1)Whereinabankruptcytheassetsareshowntobeinadequate,thecourt
may,ontheapplicationoftlletrusteeinbakruptcy,orderthatthecom-
pany'sdebtsorpartofthemshallbepaidbythemanagersorbythe
membersorbybothorsomeofthem,withorwithoutjointliability.
(2)Anorderundersub.art.(1)shallnotbemadeinrespectofmembers
whohavenotactedasmanagers,norshallitbemadewherethemana.
gersandmembersshowthattheyhaveactedwitladuecareanddili.
gence.
\,rt.;)32.
--MediI/ii'.
(1)Acompanyconsistingofmorethantwentymembersshallholdagene-
ralmeetingeachyearatthedatefixedbythearticlesofassociatiol'l.
(2)Othermeetingsmaybecalledbythemanageror,inhisabsence,bythe
auditors,ifany,andintheirabsencebymembersrepresentingmore
thanone-halfofthecapital.
Art.533.
-
DecMionstakenwithoutameeting.
Wheretheholdingofameetingisnotrequiredbyilielaworbythearti.
clesofassociation,themanagersshallsendtoeachmemberthetextofreso-
lutionsordecisionstobetakenandaskforiliememberswrittenvoteiliereon.
,.
.'

129. 116 COMMERCIAL CODE
Art.534.
-
Votesheldbymembers.
(1)Notwithstandinganyprovisiontothecontraryinthememorandumof
association,everymembermaytakepartinthemeetings.
(2)EachmembershaHbeentitledtoanumberofvotesequaltothenum.
berofsharesheldbyhim.
Art.535.
-
Majorityandqlwmm.
(1)DecisionsunderArt.532(1)andArt.533shallbetakenbyamajo-
rityofmembersrepresentingmorethanonehalfofthecapital.
(2)Wheresuchmajorityisnotobtained,themembersshallbecalledagain
byregisteredletter,anddecisionsshallbetakenbyasimplemajority
withontregardtothecapitalrepresented.
Art.536.
-
Modificationofthearticlesofassociation.
(1)Changeinthenationalityofthecompanyrequirestheunanimousde-
cisionofthemembers.
(2)Allotheramendmp'ltstothearticlesofassociationrequireamajority
voteofthemembersrepresentingthree-quartersofthecapital,unless
alargermajorityisprovidedinthearticlesofassociation.Nomember
mayberequiredtoinc~easehiscontributionwithouthisconsent.
(3)Amendmentsshallbepublishedinaccordancewiththelaw.
Art.537.
-
Righttoinspectdocuments.
(1)Wheretherearetwentyorlessmembers,everymembermayatany
time,inpersonorthroughhisagent,inspectandtakeacopyofthe
inventory,thebalancesheetandtheauditors'report,ifany,atthe
headoffice.
(2)Wheretherearemorethantwentymembers,therightsundersub-art
(I)mayonlybeexercisedduringthefifteendaysprecedingthegene-
ralmeeting.
Art.538.
-
Auditors.
(1)Whereacompanyconsistsofmorethantwentymembers,notlessthan
threeauditorsshallbeappointedinthememorandum ofassociation.
(2)Auditorsmaybere-electedatsuchperiodsandundersuchconditions
asmaybeprovidedinthearticlesofassociation.
(3)Auditorsmaybedismissedasprovidedinthearticlesofassociation.

130. COMMERCIAL CODE 117
Failingsuchprovision,theymaybedismisseda~providedinArt.535.
(4)TheprovisionsofArt.374and378shallapplytoauditors.
(5)Auditorsshallbeliable,individuallyorjointlyandseverally,tothe
companyandthirdpartiesforanyfaultornegligenceintheexecu-
tionoftheirduties.
(6)Auditorsshallnotbecivillyliable
nagers,unlesstheywereawareof
themtothemeeting.
foroffencescommittedbythema.
suchoffencesandfailedtoreport
Chapter4.Accounts
Art.539.
-
Legalreserve.
Notlessthanone-twentiethoftheprofitsshallbetransferredeachyearto
thelegalreservefunduntilsuchfundamountstoone-tenthofthecapital.
Art.540.
-
Fictitiousdividends.
(1)Membersmayhcrequiredtorepaydividendswhichhavebeenpaid
outofsumswhicharenotactualprofits.
(2)ClaimsforrepaJ'mentshallbebarredafterfiveyearsfromthedatethe
dividendswerepaid.
Art.541.
-
Fixedinterest.
(1)Thememorandumofassociationmayprovidethatafixedinterestshall
hepaidtomembers,evenwheretherearenoprofits,duringtheperiod
whenworksarebeingconstructedpriortobusinessoperations.Such
periodshallbefixedinthememorandumofassociation.
(2)Suchprovisionshallbeofnoeffectunlesspublishedintheofficial
commercialgazette.
(3)Suchinterestshallbecarriedtothedebitoftheinstallationaccount
andspreadovertheyearswhereprofitsaremade,inaccordancewith
thearticlesofassociation.
Chapter5.Dissolution
Art.542.
-
Groundsofdissolution.
(1)Aprivatelimitedcompanymaybedissolvedonthegroundsapplic.
abletoallbusinessorganizations,includingdissolutionbythecourt
forgoodcauseanddissolutionattherequestofanymemberwhere
thetermofthecompanyhasnotbeenfixed.

131. 118 COMMERCIAL CODE
(2)Provisionmaybeincludedinthearticlesofassociationpermittingre-
demptionofthemembers'sharesforafixedsum.
(3)Ajudicialinterdiction,bankruptcyorinsolvencyofamembershall
notcausedissolutionofacompany,norshallthedeathofamember,
unlessotherwiseexpresslyprovidedinthearticlesofassociation.
(4)Thearticlesofassociationmayprovidethattheheirsofadeceased
membermay,attheiroption,jointhecomp:myorherepair!thedeeen-c
member'ssharesataratebasedonthelastinventory.
Art.543.
-
Lossofthlee-quartersofthecapital.
(1)Wherethree-quartersofthecapitalare10s1,themanagersshalleonsult
withthemembersanddecidewhetherthecompanyshouldbedissolved.
(2)Wherethemanagersfailtoconsultthemembersornovaliddecision
istaken,anyinterestedpersonmayapplytothecourtfordissolution.
TITLEVIII.CONVERSION ANDAMALGAMATION
Art.544.-Generalprovisions.
(1)Theconvers:'unofoneformofbusinessorganizationintoanotherform
doesnotnecessarilycausethecreationofanewlegalperson.
(2)Themembersmayunanimouslyorbythemajorityrequiredbylaw
orthearticlesofassociationdecideonconversion.Innocaseshall
thedecisionincreasetheliabilitiesofamemberwithouthisconsent.
(3)Amembermaynotbedeprived,inwholeorinpart,oftherightsof
membershipwithouthisconsentincasesofconversion.
(4)Suchdecisionsshallbebyadulyauthenticateddeedandshallbepu-
blishedinaccordancewiththeprovisionsofArt.224.
(5)Therulesrelatingtotheformationoftherelevantbusinessorganisa-
tionshallapplywithoutprejudicetotherightsofthirdparties.
Art.545.-ConversionofageMralpartnership,alimitedpartnershipora
sharecompanyintoaprivatelimitedcompany.
(1)Anygeneralorlimitedpartnershipandcompanylimitedbysharemay
beconvertedintoprivatelimitedcompanies.
(2)Inthecaseofacompanylimitedbyshares,thedecisionshallbetak.
enbyanextraordinarygeneralmeetingheldundertheprovisionsof
Art.425.
(3)MemberswhodissentmaywithdrawasprovidedinArt.463.

132. COMMERCIAL CODE 119
Art.546.-Rightsofcreditors.
(1)Theassetsoftheformerfirmshallpassautomaticallytothenewbu.
sinessorganisationasfromthedateofregistrationintheCommercial
Register.
(2)Onregistration,creditorsoftheformerfirmshallberequiredtoesta.
blishtheirclaimswithinareasonabletimeandshallbeinform~that,
unlesstheyobjectthereto,theyshallbedeemedtobecreditorsofthe
newfirm.
(3)TheprovisionsofArt.502shallapplytocallstocreditorsundersub-
art.(2).
(4)Creditorswhodonotacceptthenewfirmshallbepaidofforgua.
ranteed.Nopaymentoutoftheassetsshallbemadetoshareholders
untilallcreditorshavebeenpaidorguaranteed.
(5)ManagersshallbeJointlyandseverallyresponsibleforcarryingoutthe
provisionsofsub-art.(2)-(4)inclusive.
(6)Managersshallcausetheconversionoftheformerfirmtobepublished.
Theyshallcausetheregistrationoftheformerfirmtobecancelled
wherctheprovis.ionsofsub-art.(4)havebeencomplied\With.
Art.547.
-
Conversionofaprivatelimitedcomp«nyintoacompanylimiled
byshares.
(1)Privatelimitedcompanymaybeconvertedintosharecompaniesun.
dertheprovisionsofArt.536.
(2)Thenamesofthememberstakingthedecisionshallbewritteninthe
minutesandsuchmembersshallbecomefoundersoftheDewshare
company.
(3)Memberswhodissentandwhosedissentisrecordedintheminutes
maywithdrawundertheprovisionsofArt.463.
Art.548.-Liabilityofmembers.
(1)Theconversionofafirmshallnotdisclmrgememberswithunlimited
liabilityoftheirliabilityforundertakingsmadepriortotheregi8tra.
tionofthedecisionofconversioninthe.commercialregister,unleu
suchregistrationindicatesthatthecreditorshaveapprovedthec0n-
version.
(2)Approvalshallbepresumedwhere~reditorshavebeeninformedof
thedecisionofconversionbyregisteredletterandhaveDotexple88ly

133. 120
COMMERCIAL CODE
dissentedtherefromwithinthirtydaysfromthedateofsuchnotifica-
tion.
Art.549.-
Amalgamation.
(1)Twoormorefi'rIDSmayamalgamate,eitherbytakingoverorbythe
formationofanewfirm.
(2)Theprovisionsofsub-art.(1)shallapplytofirmsinliquidation.
Art.550.-Decisiontoamalgamate.
Adecisiontoamalgamateshallbetakenbycaehofthefirmsconcel'1led.
Specialmeetingsofshareholdersofdifferentclassesormcetingsofdeben-
turehoLdersshallapprovethetakingoVI'.rorbeingtakenover.
Art.551.
-
Deedofamalgamation.
(1)Thetermsoftheamalgamationshallbedrawnupbyadeedwhich
shallbepublishedinaccordancewiththeprovisionsofArt.224.
(2)Noticesoftheamalgamationshallbepublishedattheheadofficeof
thefirmtakingoverorofthenewfirmresultingfromtheamalgama-
tion,aswellasattheheadofficesoffirmsceasingtoexistonamalga-
mation.
(3)Theclaimsandliabilitiesofthefirmceasingtoexistshallpasstothe
firmtakingoverortothenewfirm.
.
Art.552.-Rightsofcreditors.
(1)Creditorsofthefirmorfirmstakenoverorthefirmsconstitutinganew
11m1,whoseclaimscameintobeingbeforethepublicationofthedeed
ofamalgamationintheofficialcommercialgazettemayobjecttothe
amalgamationwithinthreemonthsfromthedateofsuchpublication.
(2)Thecourtshallrejectsuchobjectionwhereitissatisfiedthatallthe
creditorshaveagreedtoamalgamationandthatthosewhodissented
havebeenpaidorthatsumscorrespondingtotheirdebtshavebeen
paidintoaspecialaccountintheStateBankofEthiopia.
(3)Thecourtmayreject'suchobjectionandorderthatthedeedofamal.
gamationshallbeconfirmedandthatthefirmtakingoverorthenew
firmresultingfromtheamalgamationshallpaythedebtsorprovide
adequateguarantees.
Art.553.-Rightsofdebentureholders.
(1)Whcreamalgamationisnotapprovedbyameetingofthedebenture
holdersofthefirmbeingtakenover,thedebtorfirmshallredeemthe

134. CoMMERCIAL CoDE 121
debentul'esofholderswhosorequire,notlaterthanthreemonthsfrom
thedateofpublicationofthedeed.ofamalgamationintheofficialcom-
mercialgazette.
(2)Theseprovisionsshanapplytodebentureholdersoffirmsamalgamat-
ingonthecreationofanewfirm.
Art.554.-Publicationoftherightsofcreditorsanddebentureholders.
Entriesmadeinthecommercialregister&hanexpres81yrefertothe;riglhits
ofcreditorsw1derArt.552andofdebentureholdersunderArt.553.
TITLEIX
BUSINESSORGANISATIONSINCORPORATEDABROAD
OROPERATINGABROAD
Art.555.
-
FinnsincorporatedabroadhavingtheirheadofficeinEthiopia.
Finnsincorporatedabroadandwhoseheadofficeorprincipalplaceofbu-
sinessisinEthiopiashallbesubjecttoall,theprovisionsofthisCodeand
regulationsmaclethereunder,includingprovi~ionsrelatingtomemorandaof
association.
Art.556.-Firmsincorporatedabroadhavingasubsidiaryofficeorbranches
inEthiopia.
(1)Firmsincorporatedabroadandwhichhavesuh6idiaryoffiees.1'bran.
chesinEthiopia,withpermanentrepresentation,sballbesubjectin
respectofeachofficeorbranchtotheprovisionsofthisCoderelating
todepositandpublicationofthememorandumofassociationanipu.
blicationofbalancesheets.
(2)Suchfirmsshallpublishthen8Dlesofpersonsrepresentingthemper-
manentlyinEthiopia,andshanfurnishtheirsignatures.
(3)Suchfinnsshanbesubjectasregardstheirbranchesorsubsidiaries
totheprovisionsgoverningtheoperationoftheenterpriseandimpoe-
ingspecialconditions.
Art.557.-ForeignfirmswhichdifferfromtheformsofEthiopianbU8ines
organizations.
Finnsincorporatedabroad,whichdifferfromthoseprovidedforandc0-
veredbythisCode,shanbesubjecttothoseprovisionsofthisCodecon-
cerningsharecompanies,whichrelatetothepublicationoftheactsofthe
firmandtheliabilityofdirectors.
Art.558.-Liabilityarisingoutoffailuretocomplywithrequiremems.
Personsactinginthenameofthefirmwhohavenot-pliedwiththe

135. 122 COMMBBCIAL CODB
provisionsofArt.555-557inclusiveshallinfullbejointlyandseverally
liableinres~ctofthefirm'sundertakings.
Art.559.
-
FinnsincorporatedinEthiopiaandoperatingabroad.
TheprovisionsofEthiopianlawsshallapplytofirmswhioharcincorporat-
edinEthiopiaforthepurposeofbusinessactivityabroad.
Art.560.
-
Firmsinwhichforeigninterestsarerepresented.
NothinginthisCodeshallaffectthepl"Ovisionsofspecialprohibiting,01'
subjectingtospecialconditions,theexerciseofcertainactivitiesbyfirms
inwhichforcigninterestsarerepresented.
BOOKIII.CARRIAGEANDINSURANCE
TITLEI.CARRIAGEBYLAND
ChapterI.GeneralProvisions
Art.561.-Contractofcarriage.
Acontractofcarriageisacontractwherebyaperson,calledthecarrier,
undertakesforrewardtocarrypersons,baggageorgoodsandtoconvey
themtoaspecifiedplace.
Art.562.
-
Baggage.
(1)Objectswhichapassengercausestobecarriedwithhim,suchas
objectscontainedintrunks,baskets,hand-bagsorotherpackagesof
asimilarnature,shallbedeemedtobebaggage.
(2)Objectswhichapassengerisallowedtocarrywithhimandwhich
arenotregisteredbythecarriershallbedeemedtobehand-baggage.
(3)Objectswhichareentrustedtoandtakenoverbythecarriershallbe
deemedtotheregisteredbaggage.
Art.563.-Carriagebyland.
TheprovisionsofthisTitleshallapplytoanypersonwhoundertakesfor
rewardtocarrypersons,baggageorgoodsbyland,inparticularbyroad,
railwayorinlandwaterwayssuchasrivers,canalsorlakes.
Art.564.-Carriagebyair.
TheprovisionsofTitleIIofthisBookshallapplytothecarriagebyair
ofpersons,baggageorgoods.
Art.565.-Carriagebysea.
TherelevantprovisionsoftheMaritimeCodeshallapplytothecarriage
byseaofpersons,baggageorgoods.

136. COMMERCIAL Com: 123
Art.566.
-
Contract01carriagemadebyagel/f.
TheprovisionsofArt.2251oftheCivilCodesllallapply10('onIm<:l,;of
carriagemadebyagents.
Chapter2.TransportTitles
Section1.Passenger'sTicket
Art.567.-Ticketmayberequired.
(1)Acontractofcarriag~ofpersonsshallcorncintoheingwherethepar-
tiesagree.Thecarriermayrequirethepassengertoprocureforhim-
selfandtopreserveuntilcompletionofthcvoyageatransporttitlc
suchasabill,ticketorseasonticket.
(2)Provisionsmaybemadetothecffectthatapersonwhotravelswith-
outaticketshallbeliabletopayasurchargeinadditiontothccost
ofthejourney.
(3)Thecostoftransportationandthetimeofdepartureandarrivalshall
bespecifiedonthepassenger'sticket.
Section2.Luggage-Tickets
Art.568.-Right01passenger.
Thepassengermayrequirethecarriertodelivertohiminrespectof
registeredbaggagealuggage-ticketshowingthedateandplaceofissue,
theplacefromandtowhichthebaggageistobecarried,thenumberof
piecesandtheweightofthebaggage,andthecostoftransportunlessit
isincludedinthecostofthepassenger'stransport.
Art.569.-Purpose01luggage-ticket.
(1)Unlessthecontraryisproved,aluggage-ticketshallbeproofofthe
registrationandconditionsoftransportofthebaggage.
(2)TheprovisionsofthisTitleshallapplyandthecontractofcarriage
shallbevalidandremaininforcenotwithstandingthatthereisno
luggage-ticketornovalidticketorthetickethasbeenlost.Thecar-
riershallnothandthebaggagetothepersonwhorequiresitwithout
aluggage-ticketunlesssuchperooncanshowthatheisentitledto
thebaggage.
Secti<:m3.Transporttitlesinrespectofgoods
Art.570.-Transporttitlenotissued,notvalidorlOllt.
TheprovisionsofthisTitleshallapplyandthecontractofcarriageof

137. 124
COMMERl:IAL CODE
goodsshallbevalidandremaininforcenotwithstandingthatthereis
novalidticketorthetitlehasbeenlost.
Art.571.-Issueofconsignmentnote.
Anycarrierofgoodsmayrequirethesendertoprepareandtohandto
himadocumentcalledaconsignmentnote.Anysendermayrequirethe
carriertoacceptsuchconsignmentnote.
Art.572.-Copiesofconsignmentnote.
(1)Threecopiesoftheconsignmentnoteshallbemade.
(2)Thefirstcopyshallbesignedbythesenderandshallremainwith
thecarrier.
(3)Thesecondcopyshallbesignedbythesenderandthecarrierand
shallremainwiththegoods.
(4)Thethirdcopyshallbesignedbythecarrierandhandedbythe
carriertothesenderafterthegoodshavebeenaccepted.
Art.573.-Particularsinconsignmentnote.
Theconsignmentnoteshallshow:
(1)thedateandplaceofissue;
(2)theplacefromandtowhichthegoodsaretobecarried;
(3)thenamesandaddressesofthesenderandaddressee;
(4)thenameofthecarrier;
(5)themeansoftransport;
(6)thenature,number,volumeorweightofthegoods;
(7)thedistinguishingmarksornumbersaffixedontheparcels,ifany;
(8)thecostoftransport,thetimewithinwhichandtheroutewhereby
thegoodsaretobecarried.
Art.574.-Consignmentnotetoorder.
AconsigDmentnotemaybemadetoorderwherethesenderandthecar-
rieragree.
Art.,575.
-
Otherdocuments.
Wherethesenderandthecarrieragree,aconsignmentnotemaybere-
placedbyanyotherdocument,suchasareceiptdeliveredbythecarrier
onthesenderhavingmadeallappropriatestatements.
Art.576.-Effectoftransporttitles.
Unlessthecontraryisproved,aconsignmentnoteorreceiptdeliveredby

138. COMMERCIAL CODE 125
thecarriershallbeproofoftl1Cmakiilgofthecontract,ofthereceiptof
thegoodsandofthenalmc,.number,volumeorweightofthegoods.
Chapter3.RightsandDutiesofpartiestoacontractofcarriage
Section1.Rightsanddutiesofsenderandaddressee
Art.577.-Statementsbysender.
(1)Eachpieceoftheconsignmentshallshow:
(a)thenameandaddressofthesenderandtheaddressee;
(b)theplacefromandtowhichthegoodsaretobecarried;
(c)thenature,numher,valueorweight,ofthegoods;
(d)thedistinguishingmarksornumbersaffixedontheparcels,if
any.
(2)Thesendershallbeliableforanydamagecausedtothecarrierorto
apersonforwhomthecarrierisresponsiblearisingoUtofirregular,
inaccurateorincompletestatementsrelatingtotheconsignment.
Art.578.
-
Packing.
(I)Wherethenatureofthegoodsissuchthatpackingisneeded,thesen-
dershallpackthegoodssothatilieybenotlostnordamagednor
likelytodamagepersons,baggageorothergoodscarried.
(2)Thesendershallbeliableforanydamagearisingoutofdefectivepack-
ing.Thecarriershallbeliableforsuchdamagewhereheacceptedto
caITythegoodsandheknewthattheywerenotpackedorthepack-
ingwasdefective.
Art.579.
-
Rightofsendertodisposeofthegoods.
(1)Wherehecarriesoutallhisdutiesunderthecontractofcarriage,the
senderIlUlydisposeofthegoods,eitherbytakingthembackfromthe
carrierorbystoppingiliemduringtheirtransportorbycausingthem
tobedeliveredduringthetransportbeforetheyarriveattheplace
ofdestinationtoapersonotherthantheaddresseenamedinthecon-
tract.
(2)Whereatransporttitlehasbeendeliveredtothesender,hemaynot
disposeofiliegoodsunlessheproducesilietitletothecarrier.
Art.580.
-
Whensendermaynotdisposeofthegoods.
Thesendermaynotdisposeofthegoodsafterthetransporttitlehasbeen
handedtotheaddresseeorwherethegoodshavebeencarriedtotheirdesti.
nationandtheaddresseehasrequiredthecarriertodeliverthemtohim.

139. 126 COMMERCIAL CODE
Art.581.
-
Rightsofa,ddressee.
Withoutprejudicetotheprovi,ionsofArt.579and580,theaddressee
mayexercisealltherightsandshallincuralltheliabilitiesarisingout
ofacontractofcarriagetowhichhehasagreed.
Art.582.
-
Costoftransport.
(1)Thecostoftransportandallincidentalexpensesshallbemetbythe
sender.
(2)Wherethegoodshavebeensentcarriageforward,thesenderand
theaddresseewhoacceptedtheconsignmentshallbejointlyandseve-
rallyliableforthecostoftransportandallincidentalexpenses.
Section2.Dutiesofcarrierofgoodsorregisteredbaggage
Art.583.
-
Conveyanceofgoodsandbaggage.
(1)Thecarriershall,withintheagreedtime,conveythegoodstotheagreed
placewithallcustomarycareanddeliverthemtotheaddressee.
(2)Heshallinthesamemannerconveyregisteredbaggageanddeliver
ittotheaddresseeorthepersonactingonhisbehalf.
Art.584.
-
Noticetoaddressee.
Wherethegoodscannotbedeliveredattheaddressee'sdomicileorare110t
takenawaybytheaddressee,thecarriershallwitboutdelayinformthe
addresseeofthearrivalofthegoodsandofthetimewhenandplacewhere
theyareavailable.
Art.585.
-
Goodswhichcannotbedelivered.
(1)Wheregoodscannotbedelivered,thccarriershallwithoutdelayin-
formthesenderandrequirehimtogiveinstructions.Wherethecar-
riercannotkeepthegoodsinhiscustody,heshallmovethecourtto
orderthatthegoodsbedepositedwithathirdparty.
(2)Wheregoodswhichcannotbedeliveredareofaperishablenature
andthecarriercannotreceivethesender'sinstructionsinduetime,
heshallcausethegoodstobesold.
Art.586.-Baggagewhichcannotbedelivered.
(1)Whereregisteredbaggagecannotbedeliveredattheaddressee'sdomi-
cileandisnottakenawayonarrivalbythepassengCTortheperson
actingonhisbehalf,thecarriershallwherepossiblerequire:~f!passen-
gertogiveinstructions.

140. COMMERCIAL CoDE 127
(2)Wherethecarriercannotkeeptheregisteredbaggageinhiscustody
orsuchbaggageisofaperishablenature,,theprovisionsofArt.585
shallapply.
Section3.Dutiesofpartiestoacontractofcarriageofpersons
Art.587.-
Dutiesofpassenger.
Tihepassengershallpaythefareagreedintlhecontract,presentihdmseHat
thetimeandplaceofdepartureandcomplyduringthejourneyWiththe
instructionsgivenbythecarrierorprescribedbylaw.
Art.588.
-
Dut~sofcamero
Thecarriershallcarrythepassengersafelytohisdestinationandshall
complywiththetermsofthecontractastotimeandcomfort.
Chapter4.Liabilityofthecarrier
Art.589.-Handbaggage.
Handbaggageshallremaininthepassenger'scustodyandthecarriershall
notbeliableforthelossofordamagetosuchbaggage.
Art.590.-Lossofordamagetogoodsorregisteredbaggage.
Wihtoutprejudicetotheprovisionsofthefollowingarticles,thecarrier
shallbeliablefortheloss,whethertotalorpartial,ofgoodsorregistered
baggageorforanydamagetheretoordelayintheconveyancethereof.
Art.591.-Liabilityexcludedincertaincases.
Thecarriershallberelievedinwholeorinpartofhis.liabilityunder
Art.590wherehecanshowthattheloss,damageordelaywasduein
wholeorinparttoforcemajeure,aninherentdefectintheobjectcarried
orthefaultofthesenderoraddressee.
Art.592.
-
Wearandtear.
ThelossofweightorvolumewhichgoodsorregisteredbaggagesuHer
byreasonofthetransportshallberegardedasaninherentdefectand
thecarriershallbeliableforsuchlossonlyasexceedscustomarylimits.
Art.593.-Provisionsexcludingliability.
(I)ThecarriermaybyagreementrelievehimseHofliabilityfordelayin
theconveyanceofgoodsorregisteredbaggage.
(2)klyprovisionrelievingthecarrierofliabilityforlossofordamage
togoodsorregisteredbaggageshallbeofnoeffect.

141. 128 COMMERCIAL CODE
Art.594.-Limitationafliability.
Thecarl"iermarbyagreementlimithisliabilityforanytotalorpartial
losspfordamagetogoods~orregisteredbaggage.Anysuoblimitation
shallbeofnoeffectwheretheagreedcompensationis80disproportionate
tothevalueoftheobjectcarriedastomakethecarrier'sliabilitynegligible.
Art.595.
-
Liabilityofcarrierofpassengers.
Withoutprejudicetotheprovisionsofthefollowingarticles,apersonwho
carriespassengersshallbeliableforanydelayinthecarriageandforthe
deathoforbodilyinjurytoapassengerduetoanaccidentoccurringduro
ingthejourneyorwhilstthepassengerwasmountingoralighting.
Art.596.-Liabilityexcludedincertaincases.
Thecarriershallberelievedinwholeorinpartofhisliabilityfordeath
orbodilyinjuryunderArt.595wherehecanshowthattheaccident
wasdueinwholeor--in
parttoforcemajeure,theactofathirdparty
orthefaultofthepassengerhimself.
Art.597.
-
Lim~tationofliability.
(1)Thecarrier'sliabilityshallnotexceedEth.$40,0.0..0.perpassenger,
whoeverthepassengermaybe.
(2)Wherecompensationistobepaidbywayofannuity,thecapital
oftheannuityshallnotexceedEth.S40.;1>0.0..
Art.598.-Provisionsexcludingliability.
(1)Thecarriermaybyagreementrelievehimselfofliabilityforanydelay
inthecarrying.
(2)Anyprovisionrelievingthecarrierofliabilityfordeathorbodilyin-
juryorlimitingthecarrier'sliabilitytolessthanEth.S40.,000.shall
beofnoeffect.
Art.599.
-
Liabilitynotlimitedincertaincases.
TheprovisionsofArt.594and597shallnotapplywhereitisprovedthat
thedamageisduetothecarrier'sactoromissionandthecarrierknew
thatsuchactoromissionwouldorcouldcausedamage.
Art.600..
-
Liabilityofsuccessive.carriers.
(1)Whereacontractofcarriagejs-performedbymorethanonecarrier,
thepassengerorthosehavingrightsfromhimmayoulyclaimagainst
thecarrierinchargeofthatpartofthejourneyduringwhichthe

142. COMMERCIAL CODE
129
accidentordelayoccurredunlessithasbeenexpresslyspecifiedthat
theliabilityofthefirstcarrierwouldextendtothewholejourney.
(2)Inrespectofgoodsorregistercdbaggage,thesendermayclaimagainst
thefirstcarrierandtheaddresseemayclaimagainstthelastcarner.
Thesenderandaddresseemayinadditionclaimagainstthecarrier
inchargeofthatpartofthecarryingduringwhichtheloss,whether
totalorpartial,thedamageorthedelayoccurred.
(3)Thecarriersmentionedinsub-art.(2)shallbejointlyandseverally
liabletothesenderandaddressee.
Chapter5.Legalproceedings
Art.601.-Expertopinion,depositandsale.
(I)Whereadisputearisesastogoodsorregisteredbaggage,thecourt
withinwhoseareaofjurisdictionthegoodsorbaggageare,mayon
applicationallowthecallingofexpertevidence.Theapplicantshall
givenoticethereoftoallinterestedpartiesexceptincasesofurgency
wherenoticemaybewaivedbythecourt.
(2)Thecourtmayorderthegoodsorbaggagetobedepositedwithathird
party.
(3)Thecourtmayorderthegoodsorbaggagetobesoldonhavingcheck-
edtheconditionthereof.
Art.602.-Acceptanceandprotest.
(1)UncQnditionalacceptanceofgoodsorregisteredbaggageshallbea
bartoanyclaimfortotalorpartialloss,damageordelaybeing
broughtagainstthecarrier,unlesstherehasbeenfraudonthecar-
rier'spart.
(2)Thecarriershallbeliableforanynon-apparentdamagewherethead-
dresseeentersaprotestagainstthecarrierassoonasheisawareof
suchdamageorwithinnotmorethansevendaysfromthedelivery
ofthegoodsorbaggage.
Art.603.-Limitation.
(1)Anyclaimarisingoutofacontractofcarriageshallbebarredafter
twoyearsfromthedaywhenthepassengers,goodsorregisteredbag-
gagehaveorshouldhavearrivedattheirdestinationorwhentheir
carryingwasabandoned.
(2)Whereeclaimisbarred,thecreditormaynotsetuphisclaimbyway
ofcounterclaimnorbywayofdefence.
10.

143. 130 COMMERCIAL CODE
TITLEII.CARRIAGEBYAm
Chapter1.Generalprovisions
Art.604.-Scopeofapplication.
TheprovisionsofthisTitleshallapplytothecarriageofpersons,baggage
orgoodsbyaircraftwhetherforrewardorfreeofcharge.
Art.605.-Definitionofaircraft.
Anyapparatuscapableofraisingorcirculatingintheairshallbedeemed
tobeanaircraftwithinthemeaningofArt.604.
Chapter2.Transporttitles
Section1.Passenger'sticket
Art.606.-Issueofticket.
(I)Aticketshallbedeliveredtoanypersontobecarriedbyair.
(2)Theticketshallshow:
(a)theplaceanddateofissue;
(b)thenameandaddressofthecarrier;
(c)theplacefromandtowhichthepassengeristobecarriedand
theplacesofcall,ifany;
(d)thefareoftransport.
(3)Theticketshallcontainanoticeinformingthepassengerthatthe
carrier'sliabilityislimitedfordeathorbodilyinjuryandfortheloss
ofordamagetobaggage.
Art.607.-Purposeo/,ticket.
(1)Unlessthecontraryisproved,theticketshallbeproofofthemaking
andconditionsofthecontractofcarriage.
(2)TheprovisionsofthisTitleshallapplyandthecontractofcarriage
shallbev8lldandremaininforcenotwithstandingthatthereisno
ticketornovalidticketorthetickethasbeenlost.Wherethecarrier
agreestoapassengerembarkingwithoutaticketorwheretheticket
doesnotcontainthenoticeprovidedinArt.606(3),theprovisionsof
Art.636,637and638regardingthecarrier'slimitedliabilityshall
notapply.
Section2.Luggage-Ticket
Art.608.-IssueofIuSsase.ticket.
(1)Aluggage-ticketshallbeissuedwhereregisteredbaggageistobecar.
riedbyair.

144. COMMERCIAL CODE 131
(2)Theluggage-ticketshallshow:
(a)theplaceanddateofissue;
(b)thenameandaddressofthecarrier;
(c)thenumberofthepassenger'sticket;
(d)theplacefromandtowhichthebaggageistobecarried;
(e)thenumberandweightofthepieces.
(3)Wheretheluggage-ticketisnotconnectedwithapassenger'sticket
underArt.606orisnotincludedtherein,itshallshowthatthecar.
rier'sliabilityislimitedinrespectofthelossofordamagetothe
baggage.
Art.609.-Purposeofluggage-ticket.
(1)Unlessthecontraryisproved,theluggage-ticketshallbeproofofthe
registrationofthebaggageandoftheconditionsofthecontractof
carriage.
(2)TheprovisionsofthisTitleshallapplyandthecontractofcarriage
shallbevalidandremaininforcenotwithstandingthatthereisno
luggage-ticketornovalidticketorthetickethasbeenlost.Where
thecarrieracceptsthebaggagewithoutaluggage-ticketorwherea
luggage-ticketisnotconnectedwithorincludedinapassanger'sticket
anddoesnotcontainthenoticeprovidedinArt.60S(3),thepro.
visionsofArt.637regardingthecarrier'slimitedliabilityshallnot
apply.
Section3.Billoflading
Art.610.-Issueofbilloflading.
Anycarrierofgoodsmayrequirethesendertoprepareandtohandto
himadocumenteaIledabill<!flading.Anysendermayrequirethecarrier
toacceptsuchbilloflading.
Art.611.-Billofladingnotissued,notvalidorlo8t.
TheprovisionsofthisTitleshallapplyandthecontractofcarriageshall
bevalidandremaininforcenotwithstandingthatthereisnobilloflading
ornovalidbillorthebill,hasbeenlost.
Art.612.-Copiesofbilloflading.
(1)Threecopiesofthebillofladingshallbepreparedbythesenderand
deliveredtothecarriertogetherwiththegoods.
(2)Thefirstcopyshallbearthewords:"forthecarrier"andshallbe
signedbythesender.

145. 132 COMMERCIAL CODE
(3)Thesecondcopyshallbearthewords:"forthemluressee."ItshallIlc
signedbythesenderandthecarrierandshall.remainwiththegoods.
(4)Thethirdcopyshall.besignedbythecarrierandhlll1dedtothcsender
afterthegoodshavebeenacceptedbythecarrier.
Art.613.
-
Signatures.
(1)Thccarriershall.signthebillofladingbeforethcgoodsareloaded.
(2)Thecarrier'ssignaturemaybereplacedbyastamp.Thesender'ssign-
naturemaybeprintedorreplacedbyastamp.
(3)Unlessthecontraryisproved,thecarriershall.bedeemedtoacton
behalfofthesenderwherehepreparesthebillofladingatthere-
questofthesender.
Art.614.
-
Morethanolleparcel.
Wheremorethanoneparcelistobecarried,thecarriermayrequirethe
sendertoprepareseparatebillsoflading.
Art.615.-Particularsinthebilloflading.
(1)Thebillofladingshallshow:
(a)theplaceanddateofissue;
(b)theplacefromandtowhichthegoodsaretobecarried;
(c)thenameandaddressesofthesender,theaddresseeandthefirst
carrier;
(d)thenature,numberofpieces,volumeorweightofthegoods;
(e)thedistinguishingmarksornumbersaffixedontheparcels,ifany;
(f)theconditionofthegoodsandthenatureandconditionofpack-
ing,ifany;
(g)thecostoftransport;
(h)thetimewithinwhichandtheroutewherebythegoodsaretobe
carried.
(2)Thebillofladingshallcontainanoticeinformingthesenderofthe
carrier'slimitedliabilityforlossofordamagetothegoods.
Art.616.-Billofladingtoorder.
Wherethesenderandcarrieragree,thebillofladingmaybetoorder.
Art.617.-Billofladingnotissuedorincomplete.
WherethecarrierLCceptsgoodstobeloadedwithontabHloflading
..,~.\

146. CoMMERCIAL CoDE 133
havingbeenpreparedorcontainingthenoUceprovidedinArt.615(2),
theprovisionsofArt.637~ thecarrier'slimited.liabilityshall
notapply.
(1)Thesendershallbeliablefortheaccuracyofthestatementshemakes
in,thebilloflading.
(2)Heshallbeliableforanydamagecausedtothecarrierortoaperson
forwhomthecarrierisresponsiblearisingoutofirregular,inaccurate
orincompletelltatementsinthebilloflading.
Art.619.-Effectofbilloflading.
(1)Unlessthecontraryisproved,abillofladingshanbeproofofthe
makingofthecontract,ofthereceiptofthegoodsandoftheconditions
oftransport.
(2)Statementsastothe~t, sizeandpackingofthegoodsandto
thenumberofparcelsshallbedeemedtobecorrectunlessthecon.
traryisproved.
(3)Statementsastothequautity,volumeorconditionofthegoodsmay
beprovedagainstthecarrieronlywheretheaccuracyofthebill~f
ladinghasbeencheckedbythecarrierinthepresenceofthesender
andtheresultofthecheckcertifiedonthebilloflading,orwhere
suchstatementsrelatetotheapparentconditionofthegoods.
Chapter3.Rightsanddutiesofsenderandaddressee
Art.620.-Rightofsendertodisposeofthegoods.
(1)Wherehecarriesoutallhisdutiesunderthecontractofcarriage,the
sendermaydisposeofthegoods,eitherbywithdrawingthemfrom
,theairportattheplaeeofdepartureofdestination,orbystopping
themataplaceofcallorbycawnngthemtobedeliveredduringthe
carryingoroncompletionofthecarryingtoapersonother~hanthe
addresseenamedinthebillofladingorbyrequiringthemtobeflown
backtotheairportattheplaceofdeparture.
.
(2)ThesendermayexerciseIUarightsundersub-art.(1)wherenodamage
iscausedtherebytothecarrierorothersenders.Heshallbeliable
forallexpensesarisingoutoftheexerciseofsuchrights.
(3)Thecarriershallforthwithinformthesenderwhereinstructionsgiven
bythesenderundersub-art.(1)cannotbecarriedout.
Art.621.-Failuretoproducebilloflading.
(1)Acarrierwhocomplieswithinstructionsgivenbythesenderwithout

147. 134 COMMERCIAL CODE
requiringthellell.dertoproduceJrlacopyofthebillofladingshall
beliableforanydamagecausedtherebytoanypersonwhomayhave
regularlyobtainedthebilloflading.
(2)Acarrierwhohaspaidco~tion fordamagesundersuh-art.(1)
maycladmagainstthesenderforthereimbursementofsuchcompen.
sation.
Art.622.
-
WhensendermaynotdUposeofthegoods.
ThesendermaynotexerciseJrlarightsunderArt.62'0asfrom.thedate
whentheaddresseemayexerciseJrlarightsunderArt.623,unlessthead.
clre!!seecannothefound.orrefusestoacceptthegoodsorthebilloflading.
Art.623.-Rightsofaddressee.
(1)UnlessthesenderexerciseshisrightunderArt.620,.theaddressee
mayon.thearrivaloftlhegoodsattheirdestinationreqmre.thecarrier
tohandtohimthecopyofthebillofladingandtodeliverthe
goodstohim.
(2)Theprovisionsofsub.art.(1)shallnot
carrit:3outhisdutiesastopaymentand
lading.
applyunlesstheaddressee
transportunderthebillof
Art.624.-Noticetoaddressee.
Unlessotherwiseagreed,thecarriershallforthwithinformtheaddressee
ofthearrivalofthegoods.
Art.625.-Lossoftlu!goods.
Wherethecarrieradmitsthatgoodshavebeenlostorwherethegoods
havenotarrivedwithinsevendaysfromthedateonwhichtheyweredue,
theaddresseemayrequirethecarriertodischargehisliabilitiesunderthe
contractofcarriage.
Art.626.-Rightsexercisedonbehalfofathirdparty.
Wheretheycomplywiththeconditionslaiddowninthecontractofcar.
riage,thesenderandaddresseemayexercisealltheirrightsunderthepre-
cedingarticlesintheirownname;whetherontheirownbehaUoronbe.
halfofathirdparty.
Art.627.
-
Relationsbetweensenderandaddressee.
NothinginArt.620-626shallaffecttherelationsbetweenthescnderand
theaddresseenortherelationsbetweenthirdpartieswhohaveri:ghtsfrom
thesenderoraddress.,c.

148. COMMERCIAL CODE 135
Art.628.-Art.620.626notapplicableincertaincases.
AnyprovisioncontrarytotheprovisionsofArt.620-626shallbeofno
effectunlessitislaiddowninthebilloflading.
Art.629.-Informationtobegivenbysender.
(1)Thesendershallgiveallinformationandannextothebilloflading
alldocumentsnecessaryforcomplyingwithcustoms,duesorcontrol
regulationsbeforethegoodscanbedeliveredtotheaddressee.
(2)Thesendershallbeliableforanydamagecausedtothecarrierwhere
hedoesnotgivesuchinformationordocumentsorgivesinaccurate
orincompleteinformationordocuments.
(3)Theprovisionsofsub-art.(2)shallnotapplywhereafaulthasbeen
committedbythecarrierorhisagent.
(4)Thecarriershallnotbeboundtoexaminewhethertheinformationor
documentsgiventohimareaccurateorsufficient.
Chapter4.LiabilityoftheCarrier
Art.630.
-
InjurytotMperson.
Thecarriershallbeliableforthedeathoforbodilyinjurytoapassen-
gerduetoanaccidentoccurringaboardanaircraftorwhilstthepassenger
wasembarkingordisembarking.
Art.631.
-
Lossofordamagetobaggageorgoods.
Thecarriershallbeliableforthelossofordamagetoregisteredbaggage
orgoodsduetoanoccurrencehavingtakenplacewhilstsuchbaggageor
goodswerecarriedbyair.
Art.632.
-
Carryingbyair.
(1)CarryingbyairwithinthemeaningofArt.631shallincludethetime
withinwhichthebaggageorgoodsareinthecarrier'scustody,whe-
therattheairportorintheaircraftorinanyotherplacenotbeing'
allairportwheretheaircraftma.yhavetoland.
(2)Carryingbyairshallnotincludeanycarryingbyland,seaorriver
takingplaceoutsid'eauairport.Incasesofcarryingbyland,seaor
river,takingplacewithaviewtoloading,deliveringortranshipping,
anylossordamageshallbedeemedtohaveoccurredwhilethebag-
gageorgoodswerecarriedbyair,unlessthecontraryisproved.
Art.633.-Delay.
Thecarriershallbeliableforanydelayincarryingpassengers,baggageor
goods.

149. 136
COMMBRCIAL CODE
Art.634.-ProofofcarebycG7"l'ier.
Thecarriershallnotbeliablewherehecanshowthatheandhisagents
havetakenallmeasuresnecessaryforavertingthedamageorthatsuch
measurescouldnotbetaken.
Art.635.-Injuredpartyatfault.
Thecourtmayreduceorwaivethecarrier'sliabilitywherethecarrier
canshowthatthedamagewascausedinwholeorinpartbytheinjured
partyhimself.
Art.636.-Limitationofliabilityfordamagetotheperson.
(1)Thecarrier'sliabilityshallnotexceedEth.$40,000perpassenger.
Wherecompensationistobepaidbywayofannuity,thecapitalof
theannuityshallnotexceedEth.$40,OGO.
(2)Theprovisionsofsub-art.(1)shallapplyonlywherenohigherlimit
basbeenagreedbythepassengerandthecarrier.
Art.637.-Limitationofliabilityforbaggageorgoods.
(1)Inrespectofgoodsandregisteredbaggage,thecarrier'sliabilityshall
notexceedEth.$410perkg.
(2)Theprovisionsofsub-art.(1)shallnotapplywherethesenderon
handingthegoodsorbaggagetothecarrier,expresslyspecifiesthat
hehasaspecialinterestintheirdeliveryandpayssuchsurchargeas
mayberequired.
(3)Inthecaseprovidedinsub-art.(2)thecarriershallpaytheagreed
compensationunlesshecanshowthatsuchcompensationexceedsthe
sender'sactUalinterestinthedelivery.
(4)Intheeventofloss,damageordelayaffectingpartonlyoftheregi-
steredbaggageorgoodsoranyobjectfomrlngpartthereof,thecar.
rier'slimitedliabilityshallbedeterminedhavingregardtothetotal
weightofthebaggage,goodsorobjectconcerned.
(5)Wherealoss,damageordelayundersub-art.(4)affectsothergoods
carriedunderthesameluggage-ticketorbill.oflading,thecarrier's
limitedliabilityshallbedeterminedhavingregard,,,tothetotalweight
ofthegoodsconcerned.
Art.638.-Objectsinthepassenger'scustody.
Inrespectofobjectsinthepassenger'scustody,thecarrier'sliabilityshall
notexceedEth.$80.Operpassenger.

150. COMMERCIAL CODE
137
Art.639.-Caseswhercthelimitsareexceeded.
(1)ThelimitslaiddowninArt.636.638shallnotpreventthecourtfrom
grantingsuchadditionalcompensationasmayberequiredtocover
allorpartoftheexpensesincurredbytheplantiffinbringinghissuit.
(2)Theprovisionsofsub-art.(1)shaHnotapplywherethecompensa-
tiongranted,notincludingexpensesincurredbytheplantiff,doasnot
exceedthesumoHeredinwritingbythecarriertotheplaintiffwithin
sixmonthsfromtheoccurrenceofthedamageorbeforethesuitwas
brought,whereitwasbroughtmorethansixmonthsaftertheoccur-
renceofthedamage.
Art.640.-Provisionsexcludingliability.
Anyprovisionrelievingthecarrierfromliabilityorfixinglimitslower
thanthoseprovidedintheprecedingArticlesshallbeofnoeffect,and
theprovisionsofthisTitleshallapplyandthecontractshallremainin
force.
Art.641.
-
Inherentdefectinthegoods.
NotwithstandingtheprovisionsofArt.64,0,thecarriermayrelievehim.
selfofliabilityforanylossordamagearisingoutofaninherentdefect
inthegoodscarried.
Art.642.
-
Legalproceedings.
(1)AnaotionfordamagesunderArt.631-633mayonlybebroughton
theconditionsandsubjecttothelimitsprovidedinthisTitle.
(2)Theprovisionsofsub-art.(1)shallalsoapplytoclaimsunderArt.
630,wilihoutprejudicetothepersonswhoareentitledtoclaimall(!
totheirrespectiverights.
Art.643.
-
Liabilitynotlimitedincertaincases.
(1)TheprovisionsofArt.636,637and638shallnotapplywhereiti~
provedthatthedamageisduetoanactoromissionofthecarrier
orhisagent,wherethecarrieroragentknewthatsuchactoromis-
sionwouldorcouldcausedamage.
(2)
Wh~etheactoromissionisduetoanagent,itshallhaveto:be
provedthattheagentwasactinginthedischargeofhisduties.
Art.644.-Claimagainstthecarner'sagent.
(1)WhereaclaimfordamagesunderthisTitleisbroughtagainstthe

151. 138
COMMERCIAL CODE
carrier'sagent,theprovisionsofArt.636,637and638shallapplyto
theagent,providedheactedinthedischargeofhisduties.
(2)Thetotalcompensationduefromthecarrierandtheagentshallnot
exceedthelimitslaiddowninArt.636,637and638.
(3)Theprovisionsofsub-art.(1)and(2)shallnotapplywhereitis
provedthatthedamageisduetotheagent'sactoromissionand
theagentknewthatsuchactoromissionwouldorwouldbelikely
tocausedamage.
Art.645.-Accepronceandprotest.
(1)Unlessthecontraryisproved,unconditionalacceptanceofbaggage
orgoodsbytheaddresseeshallbeproofthatthegoodshavebeen
deliveredingoodconditionandinaccordancewiththebilloflading.
(2)Incasesofdamage,theaddresseeshallenteraprotestagainstthe
carriera8soonashcisawareoft!hedamageorw1t1rinnotmoretlhan
sevendaysfromthedeliveryofthebaggageandnotmorethanfour-
teendaysfromthedeliveryofthegoods.
(3)Incasesofdelay,protestshallbeenetred
twenty-onedaysfromthedateonwhichthe
deliveredtotheaddressee.
(4)Prote6tundertihisAl1tideshallbeenteredbyanoticeonthebillof
ladingorbyanyotherdocumentsent,tothecarrierwithintheperiods
providedinthisArticle.
(5)Whereprotestisnotenteredinduetime,noclaimmaybebrought
againstthecarrier,unlesstherehasbeenfraudonthecarrier'spart.
withinnotmorethan
baggageorgoodswere
Art.646.-Deathofdebtor.
Wherethedebtordies,claimsfordamagesunderthisTitleshallbe
broughtagainstthosehavingrightsfromhim.
Art.647.-Jurisdiction.
(1)AnyclaimfordamagesunderthisTitlemaybebrought,inthedis-
cretionoftheplaintiff,eitherbeforethecourtoftheplacewhere
thecarrierisdomiciled,hashisprincipalplaceofbnsinessorhasan
agentwhomadethecontractorbeforethecourtoftheplaceof
destination.
(2)Anyprovisioncontrarytotheprovisionsofsub-art.(1)shallbeof
noeffect.
(3)Inrespectofcarriageofgoods,provisionsmaybemadewithaview
toarbitration,providedsucharbitrationistotakeplaceinanyof
theplacesmentionedinsub-art.(1).

152. COMMERCIAL CODE
139
Art.648.-Limitation.
AnyclaimfordamagesunderthisTitleshallbebarredafter
I
twoyears
fromthedaywhentheaircraftarrivedorshouldhavearrivedorwhen
thecarryingwasabandoned.
Art.649.-Definitionofdays.
ForthepurposeofthisTitle"days"shallincludealldays,whetherworking
daysorholidays.
Chapter5.Provisionsapplicabletocertainfonns
oftransport
Art.650.
-Extraordinarycircumstances.
TheprovisionsofArt.60,6-617ofthisCoderelatingtotransporttitles
shallnotapplytocarriagetakingplaceinextraordinarycircumstancesoutside
normaloperll.tionofthetransportundertaking.
Art.651.
-Succes~vecarriers.
ForthepurposeofthisTitle,carriagebyairundertakenbysuccessive
carriersshallbedeemedtobeonecarriagewhereithasbeenregarded
bythepartiesasasingleoperationandwhetheritwasprovidedinoneor
morecontracts.
Art.652.-Liabilityofsuccessivecarriers.
(I)Incasesofcarriagebyairundertakenbysuccessivecarriers,thepro-
visionsofthisTitleshallapplytoeachcarrierwhocarriespassen.
gers,baggageorgoodsandthecarriershallbedeemedtobeapartyto
thecontractofcarriagewheresuchcontractrelatestothatpart
ofcarryingtobeeffectedunderthatcarrier'sresponsibility.
(2)Incasesofcarriageas.definedinsub-art.(1),lIhepassengerorthose
havingrightsfromhimmayonlyclaimagainstthecarrierincharge
ofthatpartofthejourneyduringwhichtheaccidentordelayoc.
curred,unlessithasbeenspressIyspecifiedthattheliabilityofthe
firstcarrierwouldextendtothewholejourney.
(3)Inrespectofgoodsorregistert1baggll8e,thesendermayclaim
againstthefirstcarrierandtheaddresseemayclaiml18ainstthelast
carrier.Thesenderandaddresseemayinadditionclaiml18ainstthe
carrierinchargeof,thatpartofthecarryingduringwhichtheloss,
whethertotalorpartial,thedamageorthedelayoccurred.
(j.)
Thecarriersmentionedinsub-art.(3)shallbejointlyandseverally
liabletothesenderandaddressee.

153. 140
COMMERCIAL CODB
Art.653.-Combinedcarnage.
(1)Incasesofcombinedcarriageeffectedpartlybyairandpartlyby
othermeansoftransport,theprovisionsofthisTitleshallapplyto
thecarryingbyaironly.
(2)Thepartiesmaymakeprovisionsonothermeansoftransportin
theprovisionsofthisTitleregardingcarryingbyair.
TITLEIII.INSURANCE
Chapter1.GeneralProvisions
Art.654.-Definition.
(1)AninsurancepolicyisacontraCtwherebyaperson,calledthein-
surer,undertakesagainstpaymentofoneormorepremiumstopay
toaperson,calledthebeneficiary,asumofmoneywhereaspeci-
fiedriskmaterialises.
(2)Wheredamagesareinsured,theinsurancepolicy
therisksaffectingpropertyorarisingoutofthe
civilliability.
(3)Wherepersonsareinsured,theinsurance
risksariBingoutofdeathorlife,ortorisks
thepersonorillness.
shallextendto
insuredperson's
policyshallextendto
arisingoutofinjuryto
Art.655.-ScopeofapplicationofthisTitle.
(1)TheprovisionsofthisTitleshallapplytoinsuranceofrisksarisingon
land,onriversorintheair.
(2)Theyshallnotapplytomarineinsurancewhichshallbesubjectto
therelevantprovisionsoftheMaritimeCode,nortoStateinsurance.
Art.656.-
Insurancecompanies.
Theconditionsonwhichphysicalpersonsorbusinessorganisationsmay
carryoninsurancebusinessshanbeprovidedbylaw.
Chapter2.Provisionsapplicabletoallformsofinsurance
Section1.InsurancePolicy
Art.657.-Proofofcontractofinsurance.
(1)Thecontractofinsuranceshallbesupportedhyadocumentcalled
aninsurancepolicy.
(2)Thepolicymayonlybevariedinwritingbydocumentscalled
endorsements.

154. COMMERCIAL CODE 141
(3)Theinsurerandbeneficiaryshallbeboundwhere,priortothe
signatureofthe~licyorendorsements,theinsurerhandstothe
beneficiaryadocumentsettingupaprovisionalguaranteeuntilthe
policyorendorsementissigned.
Art.658.-Particularsinthepolicy.
Theinsurancepolicyshallshow:
(a)theplaceanddateofthecontract;
(b)thenamesandaddressesoftheparties;
(c)theitem,liabilityorpersoninsured;
(d)thenatureoftherisksinsured;
(e)theamountoftheguarantee;
(f)theamountofthepremium;
(g)thetermforwhict..t~econtractismade.
Art.659.
-
Entryintoforceofinsurancepolicy.
(1)Unlessotherwiseexpresslyspecified,theinsurancepolicyshallcome
intoforceonthedaywhenthepolicyissigned.
(2)Provisionsmaybemadetotheeffectthatthepolicyshallonlycome
intoforceafterthefirstpremiumhasbeenpaid.
Art.660.
-
Policytoorder.
(1)Thepolicymaybeinthenameofaspecifiedpersonortoorder.
(2)Theinsurermaysetupagainsttheassigneeorendorseethedefences
whichhecouldhavesetupagainsttheoriginalbeneficiary.
Art.661.
-
Policymadeon-behalfofathirdparty.
(1)Aninsurancepolicymaybemadebyanaccreditedagent.
(2)Aninsurancepolicymaybemadeonbehalfofathirdpartyeven
wherethesubscriberisnotanagent.Thebeneficiarymayavail
himselfoftheinsurancepolicywhereheacceptedit.Suchaccept-
ancemaybegivenevenaftertheriskinsuredhasmateriali8ed.The
subscribershallincurallliabilitksunderthecontractuntilthepolicy
isacceptedbythebeneficiary.
Art.662.-Policymadeforanunspecifiedthirdparty.
(1)Acont.ractofinsurancemaybemadeforanunsp.ooified,ulilirdpartywho
mayeventuallyhaveaninterest.Itshall00deemedtobemadeonbe-
halfoft'heprospectivebeneficiary.

155. 142
COMMERCIAL CODE
(2)Thesubscriberofapolicyundersub-art.(1)shallbeliabletopay
thepremiums.Theinsurermaysetupagainstthebeneficiarythe
defenceswhichhecouldhavesetupagainstthesubscriber.
Section2.Rightsanddutiesoftheparties
Art.663.-
Risksinsured.
(I)Theinsurershallguaranteethebeneficiaryagainsttherisksspecified
inthepolicy.
(2)Unlessotherwiseagreed,risksarisingoutofunforeseeneventsorthe
negligenceofthebeneficiaryshallbecoveredbytheinsurance.
(3)Notwithstandinganyprovisiontothecontrary,risksarisingoutofthe
intentionaldefaultofthebeneficiaryshallnotbecoveredbytheinsu.
rance.
Art.664.-
Faultscommittedbypersonsforwhomthebeneficiaryisresponsible.
(1)Theinsurershallguaranteethebeneficiaryagainstlossesordamages
duetothefaultofpersonsforwhomthebeneficiaryisresponsible.
(2)Theprovisionsofsub-art.(1)shallapplyregardlessofthenatureor
gravityofthefaultcommitted.
Art.665.
-
Dutiesofinsurer.
(1)Theinsurershallpaytheagreedsumwithinthetimespecifiedinthe
policyorwhentheriskinsuredagainstoccursoratthetimespecified
inthepolicy.
(2)Theinsurer'sliabilityshallnotexceedtheamountspecifiedinthe
policy.
Art.666.-Paymentofpremiums.
(1)Thebeneficiaryshallpaytheagreedpremiumatthetimespecifiedin
thepolicy.
(2)Notwithstandinganyprovisiontothecontrary,thepolicyshallnot
terminateasofrightwhenthepremiumisnotpaidinduetime.
Theinsurershalldemandpayment.
(3)Notwithstandinganyprovisiontothecontrary,thep<>lieyshallbesus-
pendedafteronemonthfromademandundersub-art.(2)wherethe
premiumisnotpaid.
(4)Wheretheperiodofonemonthhasexpired,theinsurermayclaim
paymentofthepremiumorrequiretheterminationofthepolicy.

156. COMMERCIAL CODE
143
(5)Wherethepremiumispaid,thepolicyshallre-enterintoforceonthe
dayofpayment.
(6)TheprovisionsofthisArticleshallnotapplytolifeinsurance.
Art667.
-
Statementsonmakingproposalsforapolicy.
Onmakingproposalsforapolicy,thebeneficiaryshallstateexactlyallthe
circumstanceswithinhisknowledgeandwhicharelikelytoassistthein-
surertoappreciatefullytherisksheundertakestoinsure.
Art.668.
-
Factsconcealedandfalsestatements.
(1)Thepolicyshallbeofnoeffcctwhercthebeneficiaryintentionally
concealedfactsormadefalsestatcmentsandsuchconcealmentorfalse
statementscausetheinsurerwronglytoappreciatetheriskstobein-
suredsothat,hadhebeenawareofthetruth,theinsurerwouldnot
haveenteredintothepolicyorwouldhaveimposedtermslessfavour-
abletothebeneficiary.Theinsurershallretainallpremiumspaid.
(2)Notwithstandinganyprovisiontothecontrary,thepolicyshallre-
maininforcewhereconcealmentorfnlcestatementsarenotdelibe-
rateanditcannotbeshownthatthebeneficiaryactedinbadfaith.
(a)Whereconcealmentorfalsestatementsarediscoveredbeforethe
riskmaterialises,theinsurermayterminatethepolicybygiving
onemonth'snoticeormaymaintainthepolicyandincreasethe
premium.
(b)Whereconcealmentorfalsestatementsarediscoveredafterthe
riskhasmaterialised,thesumtobepaidbytheinsurershallbe
reducedhavingregardtothedifferencebetweenthepremiums
actuallypaidandthepremiumswhichoughttohavebeenpaid,
hadthebeneficiarynotconcealedthefactsormadenofalsestate-
ments.
Art.669.
-
Increaseofrisks.
(1)Wheretherisksincreaseinsuchamannerthattheinsurer,hadhe
knownthefactsatthetimewhenthepolicywasmade,wouldnothave
enteredintothepolicyorwouldhaveimposedtermslessfavourable
tothebeneficiary,thebeneficiaryshallinformtheinsurerwithinfifteen
daysfromtheoccurrenceincrcasingtherisks,wheresuchoccurrence
isduetothebeneficiary,orwithinfifteendaysfromthebeneficiary
beingaware'ofsuchoccurrence.Theseperiodsmaynotbeshortened
inthepolicy.

157. 144 COMMERCIAL CODE
(2)Theinsurermayterminatethepolicyormaintainitandincreasethe
premium.
(3)1100pro¥isionsof
""rt.668mallapplywherethebeneficiarydoesnot
informtheinsurerundersub.art.(1)orgivesfalseinformation.
(4)TheprovisionsofthisArticleshallnotapplytolifeinsurance.
Art.670.-Occurrenceofri6ktobenotified.
(1)Unlessheispreventedbyforcemajeure,thebeneficiaryshallinform
theinsurerofanyoccurrencelikelytorendertheil18urerliableas
soonasheknowsofsuchoccurrenceorwithinnotmorethanfivedays.
(2)Thisperiodmaynotbeshortenedinthepolicy.
Art.671.-Bankruptcy.
(1)T,heinsurancepolicyshallnotterminateasofrightwherethebene.
ficiaryisdeclaredbankrupt.The.trusteesinbankruptcyshallbenefit
bythepolicyandshallbeliablefortheunpaidpremiums.
(2)Thetrusteesinbankruptcyandtheinsurermayterminatethepolicy
withinthreemonthsfromthejudgmentinbankruptcy.
(3)Thepolicyshallterminatewithinonemonthfromtheinsurerbeing
declaredbankrupt.
Art.672.-Deathofbeneficiary.
(1)Notwithstandinganyprovisiontothecontrary,thepolicyshallcon-
tinuewiththeheirswherethebeneficiarydies.
(2)Theheirsandtheinsurermayterminatethepolicywithinthreemonths
fromthebeneficiary'sdeath.
Art.673.-Assignmentofobjectinsured.
(1)Notwithstandinganyprovisiontothecontrary,thepolicyshallconti.
nuewiththeassigneewheretheobjectinsuredisa~gned.
(2)Theassigneeandtheinsurermayterminatethepolicywithinthree
monthsfromtheassignment.
Section3.Limitation
Art.674.-Limitation.
(1)Anyclaimarisingoutofacontractofinsuranceshallbebarredafter
twoyearsfromtheoccurrencegivingrisetotheclaimorfromthe
daywhenthepartiesknewoftheoccurrence.
(2)Incaseofconcealmentorfalsestatements,theperiodoflimitation
shallrunfromthedaywhentheinsurerknewoftheconcealment
orfalsestatement.

158. COMMERCIAL CODE itS
(3)TheperiodsproV'idedintlhisArticle~nOltbeshortenedinthe
policy.
Chapter3.Insuranceagainstdamages
Section1.Insuranceofobjects
Art.675.-Insurancepermitted.
(1)Anypersoninterestedinthepreservationofanobjectmayinsureit.
(2)Anydirectorindirectinterestinariskmaybein8tlred.
Art.6:16.-Risksexcl1ukd.
(1)Unlessotherwiseagreed,theinsurershallnotbeliablefor10ueaor
damagesduetointernationalorcivilwar. .
(2)The'insurershallestablishthatthelossordamageoccurredas
providedinsub-art.(1).
Art.677.-Lossofobjectinsured.
'thepolicyshallterminateasofrightwheretheobjectinsuredisl08t
forar~nnotspecifiedinthepolicy.
An.,~78~-C;ompensstion.
A.contractfortheinsuranceofanobjectisIicontractforcoibpenaation.
Thecompensationshallnotexceedthevalueof'theobjectiD8uredon
thedayoftheoccurrence.
An.~r9.-:-~bject-dnderinmred.
Whereonthedayoftheoccurrencetheobjectimuredisofavalue
greaterthantheamountforwhichitisinsured,theins~perIOnshall
bedeemedtobehisowninsurerforthedifferenceandshallshare
proportionatelyinthedamage,unlessotherwiseprovidedinthepolley.
Art.680.-Objectoverinsured.
,
(1)Wherethecompensationprovidedinthepolicyexceedsthevalue
oftheobj~tinsuredand'therehasbeenfraudonthepertofeither
party,theotherpartymayrequirethepolicytoterminateandmay
inadditionclaimdamages.
(2)Wheretherehasbeennofraud,thepolicyshallremaininforce
buttotheextentonlyofthe
.
actualvalue'of-theobjectinsured.
(3)Wherethebeneficiaryrequirestheinsuranceto.be
.
Jf)(iuced,the
insuredshallbeentitledtoreducedpremiUmsbutheshailretainall
premiumspaidpriortothereduction.
11*

159. 1t6 COMMBRCIAL CODB
Art.681.-Cumulaliveinsurance.
(1)WhereseveraliDB1l1'ersinsurethesameobjectagainstthesamerisk
sothattheobjectisoverinsured,eachinsurermay,wheretherehas
beenfraudonthepartofthebeneficiary,requirethetermination
ofthepolicyandmayinadditionclaimdamages.
(2)Wherethebeneficiaryisingoodfaith,eachinsurershall,where
theriskmaterialises,paycompensationinproportiontothevalue
imuredbyhim.
Art.682.-Lossofobjectinsured.
(1)Thepolicyshallbeofnoeffectwhere,atthetimewhenitismade,
theobjectisalreadylostornolongerexposedtoarisk.The
premiumspaidshallberefundedtothebeneficiary.
Art.683.-Substitutionofinsurer.
(1)Theinsurerwhohaspaidtheagreedcompensationshallsubstitute
himselftotheextentoftheamountpaidbyhimforthebeneficiary
forthepurposeofclaimingagainstthirdpartieswhocausedthe
damage.
(2)Wherethebeneficiarymakessubstitutionundersub-art.(1)impoe-
sible,theinsurermayberelievedinwholeorinpartofhis
liabilitiestothebeneficiary.
(3)Notwithstandinganyprovisiontothecontrary,theinsurermaynot
claimagainsttheascendants,descendants,agentsoremployeesofthe
insuredpersonnoragainstpersonslivingwithhim,unlesssuchper-
sonshaveactedmaliciously.
Art.684.-Rightsofprivilegedandsecuredcreditors.
(1)Notwithstandinganyprovisiontothecontrary,whereamortgaged
objectisinsured,compensationshallbepaidtothemortgagee.
Themortgageemayclaimdirectlyfromtheinsurerwhomaysetup
thedefenceswhichhecouldhavesetupagainstthebeneficiary.
(2)Paymentsmadeingoodfaithbytheinsurertotheinsuredinignoran-
ceofthemortgageshallbevalid.
Section2.Insuranceofliabilityfordamages
Art.685.-Insurerwhenliable.
Theinsurerwhoinsuredaliabilityfordamagesshallnotpaycompensation
untilacHamismadeagainsttheinsuredpersonwithaviewtoamicable
orjudicialsettlement.

160. COMMERCIAL CODE 14.7
Art.686.-Liabilityadmitted.
(1)Provisionsmaybemadetotheeffectthatadmissionofliabilityor
compromisemadewithouttheinsurer'sconsentmaynotbeletup
againsttheinsurer.
(2)Admi&:oionof.afactdoes110tamounttoadmissionofliability.
Art.687.
-
Directionofthecase.
(1)Provisionsmaybemadetotheeffectthattheinsurershallhavethe
directionofanycivilcaseoriginatingfromaclaimbroughtbythe
injuredparty.
(2)Anyprovisiontotheeffectthattheinsurershallhavethedirection
ofanycriminalcaseoriginatingfromcriminalproceedingsinstituted
againstthebeneficiaryshallbeofnoeffect.The'beneficiarymay,
inparticular,exerciseorr!1usetoexercisehisrightofrecoU1'8e.
Art.688.-Compensationto'bepaidtoinjuredparty.
(I)Noinsuredpersonshallreceivecompensatio'nuntilthethirdparty
injuredhasbeenpaidtotheextentoftheamountin8ured.
(2)AnystipulationcontrarytotheprovisiOnsofthisArticleBbaI1beofno
effect.
Chapter4.Insuranceofpersons
Section1.Generalprovisions
Art.689.-Amountinsuredf~eelyfixed.
Acontractforthe.insuranceofpersonashaIlnotbedeemedtobea
contractforcompensation.Theamountinsuredmaybefreelyfixedand
shallbedueregardlessofthedamagesufferedbytheii1suredperson.
Art.690.-Substitutionnotpossible.
Notwithstandinganyprovisiontothecontrary,theinsuredwhohaspaid
theagreedamountmaynotsubstitutehimselfforthesubscriberorbene-
ficiaryforthepurposeofclaimingagainstthirdpartieswhocausedthe
damage.
Section2.Lifeinsurance
Art.691.-Definition.
Alifeinsuranceisacontractwherebytheinsurerundertakesagainatthe
paymentofoneormorepremiumstopaytothesubscriberortothe
beneficiaryaspecifiedsumoncertainconditionsdependentuponthelife
ordeathofthesubscriberorthirdpartyinsured.
Art.692.-Lifeinsurance.
(1)Theinsurerwhoentersintoalifeinsuranceundertakestopaya

161. 168 COMMERCIAL CODE
specifiedcapitalorlifeinterestprovidedtheiniuredpersonisalive
atadatefixedinthepolicy.
(2)Tileinsurerwhoentersintoaninsurancefortheeventofdeath
underrtakestopay,onthedeathof1IheinsuredperIIOnaspecified
capitalorlifeinteresttothosehavingrightsfromtheinsuredperson
ortothebeneficiarynamedinthepolicy.
(3)Acombinedpolicymaybemadewheretheinsurerundertakesto
paybothundersub-art.(1)andsub~art.(2).
Art.693.-Lifeinsurancemadebythirdparty.
Aninsu'an~policyfortheeventofdeathmaybemadebyathird
party.Suchpolicyshallbeofnoeffectunlesstheinsuredpersonagrees
inwritingandindicatestheamountinsured.Wheretheinsuredperson
ismarried,theconsentofhisspouseshallberequired.
Art..694.
-
Incapabkpersoninsured.
Aninsurancepolicymadefortheeventofthedeathofanincapable
pena.shaD.beofnoeffectnotwithstandingthattheincapabale'perIOn
orhislegalrepresentativeagreedtotheinsurance.Thepolicymaybe
cancelledontheapplicationofanyinterestedpartyandallpremiums
paidshallberefunded.'
.
Art.695.-Particularsinlifeinsurancepalicy.
In--additiontathe'partidalarsrecwiredunderArt.65&,alifeinsurance
poHey8hall_w:
(a)theD8me,'surnameandthedateofbirthoftheilasuredperson;
(b)thenameandsurnameofthebeneficiary,ifheisknown;,
(c)theoccurrenceonwhichthepaymentoftheagreed~ount
-
depends;
(d),themannerotcalculatingimyreductioninthe'valueofthe
Policyoritsredemptionvalue.
Art.696.-Policytoorder.
Wherethepolicyistoorder,theendorsmentofthepolicyshallbeof
noeffectunlessitisdatedandshowsthenameofthebeneficiary.
Art.697.-P~.
Alifeinsurancepolicymaybepledgedhyannexingascheduletothis
effecttothepolicyorbyendorsingapolicytoorderorinaccordance
withArt.2866oftheCivilCode.

162. COMMERCIAL CODE 149
Art.698.-Insuredpersolttoagreetuassignmentorpledge.
Theassignment,endorsementorpledgeofthepolicyorthechangingof
thebeneficiarynamedinthepolicyshallheofnoeffectunlessLhe
insuredpersonagreesinwriting.
Art.699.-Suicide.
(1)Notwithstandinganyprovisiontothecontrary,aninsurancepolicy
fortheeventofdeathshallheofnoeffcctwheretheinsuredperson
knowinglycommitssuicide.Theinsurershallestablishthatsuicide
wascommittedknowingly.
(2)Thepolicyshallbeeffectivewherethebeneficiaryeanshowthat
suicidewasnotcommittedknowingly.
Art.700.
-
Murderofbeneficiary.
Aninsurancepolicyfortheeventofdeathshallbeofnoeffectwherethe
beneficiaryintentionallykillstheinsuredpersonandisconvictedthere-
ofbyacriminalcourt.
Art.701.-Beneficiaryofinsurancepolicy.
(1)Aninsurancepolicyfortheeventofdeathmaybemadetothc
benefitofspecifiedbeneficiaries.
(2)Thefollowingpersonsshallbedeemedtobespecifiedbeneficiaries
notwithstandingthattheyarenotmentionedbyname:
(a)thesubscriber'sspouse,evenwherethemarriagetookplace
afterthepolicywasenteredinto;
(b)thesubscriber'schildren,whetherornothornatthetimewhen
thepolicyisenteredinto.
(3)Wherethebeneficiaryisnotspecifiedinthepolicyorthebene-
ficiaryspecifiedinthepolicydoesnotagree,thesubscribermay
nameabeneficiaryorsubstituteabeneficiaryforanotherbywill,
scheduleorendorsement.
Art.702.-Beneficiarymustbealive.
.Unlessotherwiseagreed,thebenefitshallbedeemedtobepayableonly
ontheconditionthatthebeneficiarybealiveonthedaywhenthecapital
orlifeinterestistobepaid.
Art.703.-Agreementofbeneficiary.
(1)Theallocationofthebenefitofapolicytoaspecifiedbeneficiary
maynotberevokedafterthebeneficiaryhasagreedtothepolicy.

163. 150 COMMERCIAL CODE
(2)TheallocationofthebenefitofapolicyLoaspecifiedbencficiarymay
berevokeduntilsuchtimeasthebeneficiaryhasagreedtothe
policy.
Art.704.-Effectoninsurer.
Theagreementofthebeneficiaryortherevocationofthebeneficiary
maynotbepleadedagainsttheinsurerunlesshewasawarethereof.
Art.705.-Beneficiarynotspecified.
Wherenobeneficiaryhasbeenspecifiedorhehasheenrevokedori~noL
alive,thecapitaltobe'paidbytheinsurershallbepaidintothesuI,.
scriber'sestate.
Art.706.
-
Rightsofbeneficiary.
(1)Thebeneficiarymayclaimdirectlyagainsttheinsurer.
(2)Thesumstohepaidtoaspecifiedbeneficiaryshallnotformpart
oftheinsuredperson'sestate.Thebeneficiaryshallbedeemedto
beentitledtheretoasfromthedaywhenthepolicywasenteredinto,
notwithstandingthatheagreedtothepolicyafterthedeathofthe
insuredperson.
(3)Thesumstobepaidtothesubscriber'sspouseshallberegardedas
thepersonalpropertyofthatspouse.
Art.707.-Norefund.
Thesumspaidtothebeneficiaryshallnothavetoberefundedtothe
inheritance.
Art.7'08.-Rightsofcreditors.
(1)Thecreditorsoftheinsuredpersonhavenorightonthesumstohe
paidtothebeneficiary.
(2)TheprovisionsofArt.1029(a)ofthisCodeshallnotapplywherethe
insuredpersonisdeclaredbankrupt.
Art.709.-Premiumsnotpaid.
(1)Theinsurermaynotbringanactionforthepaymentofpremiums
dueinrespectofalifeinsurance.
(2)1£apremiumhasnotheenpaid8'ttheduedatconapolicyonwhie,h
lessthanthreeannualpremiumshavebeenpaid,theinsurermay
demandpayment.Ifpaymentisnotmadewithinonemonthfrom
thedateofthedemand,theinsurermayterminatethepolicy,.This
periodmaynotb8shortenedinthepolicy.

164. COMMERCIAL CODE 151
(:q]I'itpremiullI"iI~IHJI!wenpai,[attiledue,latconIIpolicyon
whichatleastthreeannualpremiumshavebeenpaidandpayment
isnotmadewithinonemonthfromthedateofademandforpay-
ment,thepolieyshallnotlapse.Theinsurermayissueapaidup
policyorotherwisereducethecapitalorlifeinterestofthepolicy
accordingtoregulationsmadeunderArt.656.
Art.710.
-
Redeeming.
(1)Notwithstandinganyprovisiontothecontrary,theinsuredperson
may,atanytimeafterthreeannualpremiumshavebeenpaid,ask
toredeemaninsurancepolicymadefortheeventofhisdeath.
(2)Themannerofcalculatingthepriceofredeemingshallbespecified
inthepolicyaccordingtoregulationsmadeunderArt.656.
(3)TheprovisionsofthisArticleshallnotapplytoprovisionalinsurance
policiesfortheeventofdeath.
Section3.Insuranceagainstaccidentsandillness
Art.711.
-
Risksinsured.
~J)Aninsurancepolicyagainstaccidentsisacontractwherebythein-
surerundertakestopayaspecifiedsumtotheinsuredpersonwhere
theinsuredpersonisthevictimofanI!ccidentduringtheperiodspeci-
fiedinthepolicy,ortothebeneficiarynamedinthepolicy,where
theinsuredperSondies.
(2)Theinsurermaylimithisguaranteetospecifiedaccidentsorspe-
cifiedconsequencesofanaccident.
(3)Accidentincludesanybodilyinjuryarisingoutofunexpectedex-
traneousoccurrences;
(4)Theinsurermayinsureagainstillness.
Art.712.
-
Provisionsrelatingtolifeinsurancenotapplicable.
TheprovisionsofSection2ofthisChapterrelatingtolifeinsurance
shallnotapplytoinsuranceagainstaccidentsorillness.
TITLEIV.GAMESANDGAMBLING
Art.713.
-
Gamesandgambling.
(1)Thcprovisionsrelatingtoinsuranceshallnot
whicharein'thenatureofgamesorgambling.
(2)WithoutprejudicetotheprovisionsofArt.714,
shallnotgiverisetovalidclaimsforpayment.
applytooperations
gamesandgambling
r
t
~

165. 152 COMMERCIAL CODE
(3)Whereapersoncapableundercivillawhasspontaneouslypaida
debtarisingoutofagameorgamblinginwhich110fraudhasbeen
committed,suehpersoncannotclaimbackthesumpaid.
Art.714.-Defencebasedongamenotadmissible.
(1)Adefencebasedongameshallnotbeadmissibleinrespectofstock
exchangespeculations,evenwheresuchspeculationsareliquidated
hypayingthedifferences,andregardlessoftheprofessionandin-
tentionofthepartiesandoftheimportanceofthespeculations.
(2)Adefencebasedongameshallnotbeadmissibleinrespectofgames.
orgamblingconnectedwithsportingactivitiesbutthecourtmayreduce
theamountclaimedwhereitthinksittobeexcessive.
(3)Adefencebasedongameshallnotbeadmissibleinrespectofanylot.
teryorbettingauthorisedbythegovernment.
BOOKIV
NEGOTIABLEINSTRUMENTSANDBANKINGTRANSACTIONS
TITLEI.GENERALPROVISIONS
Art.715.
-
Definitions.
(1)Anegotiableinstrumentisanydocwrientincorporatingarightto
anentitlementinsuchmannerthatitbenotpossibletoenforceor
transfertherightseparatelyfromtheinstmment.
(2)Thelawrecognisesinparticularasnegotiableinstmmentscommer-
cialinstruments,transferabl~securities,documentsoftitletogoods.
Art.716.
-
Obligationsarisingoutofnegotiableinstruments.
(J)Thepossessorofanegoti'able'inst'''.!menthasarighttotheentitle-
mentasexpressedintheinstrumentagainstpresentmentofthesaiel
instrumenttothedebtor,oneonditionthatheestablishesthathe
isalawfulpossessorinthemannerprovidedbylaw.
(2)Thedebtorshallonlypayagainstdeliveryoftheinstrument.
(3)Exceptincaseoffraudorgrossnegligenceonhispart,thedebtor
shallbereleasedbypaymentatmaturitytothepersontowhomthe
instrumentgivesthecapacityofcreditor,notwithstandingthatthe
saidpersonisnottheholderoftheright.
Art.717.-Defences.
(1)The(lebtormayonlysetupagainsttheholderoftheinstrument
defencesbasedontheirpersonal-relations,defencesofformand
thosebasedonthetextoftheinstrument.
,~

166. COMMERCIAL CODE
153
(2)Hemay8pt
"I'
rkfnlceshaf'f'rJUllFal-dficRtionofsignature,lackof
capacityorpowerufrepresentationatlhctimcofissueoftheins-
strument,orontheabsenceofthenecessaryconditionsforbringing
theproceedings.
(3)ThedebtormaynotselupagainsttheholderoftheinstrumentIll"
fencesbasedonhispersonalrelationswithprecedingholders,unless
theholder,inacquiringtheinstrument,hasknowinglyactedtothe
detrimcntofthedebtor.
Art.718.
-
Holderinduecourse.
Noclaimforrecoverymaybemadeagainstapersonwhohasacquired
anegotiableinstrumentinduecourse,inaccordancewiththerillesnpply.
ingtonegotiation.
Art.719.-Formsoftransfer.
Accordingtotheformsprovidedfortheirtransfer,negotiableinstruments
maybetobearer,inaspeficiednameortoorder.
Art.720.-Conversionofinstruments.
(1)Negotiableinstrumentstobearermaybeconvertedintoinstru-
mentsinaspecifiednamebythepersonissuingthem,ontherequcst
andattheexpenseofthepossessor.
(2)Except~hereconversionisforbiddenbylaworexpresselybytheperson
issuingtheinstruments,instrumentsinaspecifiednamemaybecon.
vertedintoinstrumentstobearer,ontherequestandattheexpenseof
theholder,thelatterestablishinghisidentityandhiscapacityinac-
cordancewiththeprovisionsofArt.723(2).
Art.721.
-
Instrumentstobearer.Transferandestablishmentofrightby
holder.
(1)Aninstrumenttobearershallbetransferredbydeliveryoftheins-
trument.
(2)Theholderofaninstrumenttobearerestablisheshisrighttothe
entitlementasexpressedintheinstrumentbythesolefactofpresent.
mentofthesaidinstrument.
Art.722.
-
Instrumentsinaspecifiedname.Establiahmem
01rightbyholder.
Theholderofaninstrumentinaspecifiednameestablisheshisrightto
theentitlementasexpressedintheinstrumentbythefactofhisdesigna.
tionasbeneficiarythereinandintheregisterheldbythepersonissuing
thesaidinstrument.

167. 154 COMMERCIAL CODE
Art.723.
-
InslrumefltsinIIs}Jf'eijiednam".Transfer.
(1)Instrumentsinaspecifiednamemaybetransferredbytheentryor
thenameofthetransfereeintheinstrumentandintheregisterheld
hythepersonissuingthesaidinstrument.Theymayalsohetrans-
ferred
bY'
deliveryofanewinstrumentinthenameofthenewholder.
Suchddiveryshallbeenteredintheregister.
(2)Apersonrequestingregistrationofaninstrumentinfavourofanother
person,ordeliveryofanewinstrumentregisteredinthenameofthe
lattershallestablishhisidentityandhiscapacitytodisposethereof
underthelaw.Ifanyoftheseformalitiesisrequiredbythetransferee,
thesaidtransfereeshallprodue~theinstrumentandestablishhisrights
bydeeddrawnupbyapublicofficer.
(3)Thepersonissuingtheinstrumentshallbeliableformakingthene-
cessaryentriesintheregisterandtheinstrument.
(4)Apersonwho'issuesandtransfersaninstrumentunderthisArticle
shallbeliableonlyforfault.
Art.724.
-
lnstrumentsteorder.Transferandestablishmentofrightbyholder.
(1)Instrumentstoordermaybetransferredbyendorsement,followedby
deliveryoftheinstrument!othebeneficiaryunderthetransfer.
(2)Theholderofaninstrumenttoorderestablisheshisrighttotheentit-
lementasexpr~ssedintheinstrumentbyanuninterruptedseriesof
endorsments,evenifthelastendorsementisinblank.Cancelleden-
dorsementsshallbedeemednottobewritten.Whereanendorsement
inblankisfollowedbyanotherendorsement,thesignatoryvfthislast
endorsementshallbedeemedto!..lVeacquiredtheinstrumentbythe
endorsementinblank.
Art.725.
-
Formsofendorsement.
(1)Anendorsementshallbewrittenontheinstrumentandsignedby
theendorser.
(2)Anendorsementnotcontainingthenameoftheendorseeshallbe
valid.
(3)Anendorsemlillt"tobearer"shallbeequivalenttoanendorsementin
blank.
(4)Anendorsementshallbeunconditional.Anyconditiontowhichit
ismadesubjectshallbeofnoeffect.
(5)Apartialendorsementshallbenullandvoid.

168. COMMERCIAL CODE
155
v
Art.726.
-Ellertsofendorsement.
(1)Anendorsementtransfersalltherightsarangoutoftheinstru-
mont.
(2)Iftheendorsementisinblank,~heholdermay:
(a)fillupjjhe
blankei'therwithhisownnameortibatofapother
,person;or
(b)re-endorsetheinstrumentinblankortoanotherperson;or
(c)transfertheinstrumenttoathirdperson,withoutfil1IDgupthe
blankandwithoutendorsingit.
'
Art.727.-Obligationsofendorser.
Unlessothemviseprovidedbylsworbytheinstrument,theendorsershall
nortbeliablewherethepersonissuingjj!Jeinstrumentfailstocarryout
h~sobligamons.
Art.728.
-Endorsementforcollectionorbyattorney.
(1)Wheretheendorsementcontainsthewords"valueincollection,"
"forcollection,""byattorney"oranyoIIhersimilarwordsimplying
agenoy,,jjheOOldermayexercisealltIherightsarisingouto£f!:1einstru-
ment,but,hecanonlyendorseitinhiscapaciJtyasagent.
(2)Thepersonissuingtheinstrumentmayonlysetupagainsttheagent
su'chdefencesasconldbesetupagainsttheprincipal. '
(3)Theagencygrarntedbypowerofattorneyshallnotterminateby
reasonofthedeathoftheprincipalorhisbecominglegaUyinc'apahle.
Art.729.-ETldtJrsementinpledge.
(1)Wlheretheendorsemtmtcontains1Ihewords
'"mueinsecurity",
"valuempledie"oranyothersimilarwordsimplyingpledge,,the
holdermayexeroiseallthe~tsILrisingoutoftheiristrum6Dit,but
hisendorsementhastheeffectsonlyof
~
endorsementbyanagent.
(2)Thep.ersonissuingtheinSitrumentmayonlysetupagainsttheendor-
seeinpledgesuchdefencesasarebasedonhispersonalrelations
withtheerndorser,unlesstheendorsee,inreceivingtheinstruments,
knowinglyaoledtothedetrimentofthedebtor.
Art.';30.
-
Assignment
ofinstrumentstoorder.
Acquisimonofaninstrumenttoorderbymeansotherthanendorsement
givesrisetotheeffectsofanonlinaryassignmeDtonly.
Art.731.
-
Negotia.bleinstrumentsdamaged,destroyed,lostorstolen.
Theproceduretobefollowedinthecaseofnegoliiiableinstruments
damaged,destrqypd,lost~stolenshallheprescribed.

169. 156 COMMERCIAL CODE
TITLEII.COMMERCIAL INSTRUMENTS
Chapter1.GeneralProvisions
Al'It.732.-Definitions.
(1)Commercialinstrumentsarenegotiableinstrumentssettingoutan
entitlementcons.istinginthepaymentofasumofmoney.
(2)Billsofexohange,promissorynotes,cheques,travellersohequesand
warehousegoodsdepositcert,i,fieatesshallbedeemedtobecom-
meroialinstrumentsundertlhisCode.
(3)'I1heprovisionsofArt.2813-2824oftheCivilCod~shallapplyto'
rwarehousegoodsdepositcertificates.
Art.733.-Legalcapacity.
Anypersonhavingcontractualcapacitymaybindhimselfbycommercial
instrument.
Am.734.-Signature.
(1)DeclarationsmadebyoommercialmstrumeIlll:sshallbearI1hesignature
of,thepersonmakinglJIhem.
(2)Nevertheless,signaturemaybeapposedbyahandwrittenmarkor
bymechanicalprocesssuchasastamp.
(3)Whenaphysicalpersonisunabletosign,!hisconsentshallbeevi-
dencedbyanau1lhenticdeclarationonIJheinstrumeIllt.
Chapter2.BillsofExchange
Section1.Establishmentandfonnofbillsofexchange
Art.735.-Req,uirements.
AbillofexchangeshallCOIIItaia1:
(a)theterm"billofexclmnge"insertedinthebodyoftheinstTument
andexpressedmthelanguageemployedindrawinguptheinstru-
ment;
(b)anunconditionalordertopayasumoeJ::taininmoney;
(c)thenameofthepersonwhoistopay(drawee);
(d)thetimeofpayment;
(e)theplaceofpayment;
(f)thenameofthepersontowhomortowhoseorderpaymentisto
bemadeoranindication!lJbatitshall.bepayabletoOOail'er;
(g)thedatelWIhenandplace:Wherethebillisissued;
(h),thelligDatureofo'!b.penonWhoissuesdiehill(drewer).

170. CO'HI\IERCIAL CODE 157
Art.n6.
-
Requirementsabsent.
WhereanyoftherequirementsprovidedinArt.735isabsenttheinstru.
mentshallnotbevalid'asabillofexchange,exceptinthecasesspeci-
fiedinsub-art.(a),(b)and(c)hcreundc,:
(a)abillofexchangeinwhichthetimeofpaymentisnotspecified
slJallbedeemedtobepayableatsight;
(b)unlesso~hel'wiseexpresslyspecified,theplacementionedbesidethe
nameofthedraweeshallbedeemedtobetheplaceofpayment,and
atthesametimetheplaceofthedomicileofvhedrawee;
(c)abillofexchangewhiehdoesnotmentiontheplaceofitsissue
shallbedeemedtohavebeendrawnintheplacementionedbeside
thenameofthedrawer.
Art.737.
-
Specialcases.
(I)Abillofexchangemaybedrawnpayabletodrawer'sorder.
(2)ItIllaybedrawnonthedrawerhimself.
(3)Itmayhedrawnforaccountofathirdperson.
Art.738.
-
Domidledbill.
Abillofexchangemaybepayableatthedomicileofathirdparty,
eitherinthelocalitywherethedrawee,hashisdomicileorinanother
10caHty.
Art.739.
-
Stipulatiunastointerest.
(I)Inabillofcxchangepayableatsightoratafixedperiodaftersight,
paymentofinterestmaybeprovided.Aprovisionastointerestin-
sertedinanyotherhillofexchangeshallbeofnoeffect.
(2)Theprovisionforinterestshallbeofnoeffectunlesstherateis
specified
,
(3)Interestshallrunfromthedaleofthehillofexchange,unlesssome
otherdaleisspecified.
.l.7.10...-Discr<'j)/tl/cyinthesumpayable.
(~)\Vherethestunpayablebyahillofexchangeis
wordsandfiguresandthereisadiscrepancy,the
wordsshallprevail.
(:n
Wb"!'e1'1."Stunj\;1\;1hlehya1.illof"xehang"isexpressed
mOJ'"vhan
o'I('Cillwo!'tlsormoreIhanOllceinfigm'csandthereisadiscrc.
paney,thesmallersumshallp.revail.
expressedbothin
sumexpressedin

171. 158 COMMERCIAL CODE
Art.HI.
-
Signature01personsincapable01bindingthemselves.
Ifahill.ofexchangebearssignatures.ofpersonsincapable.ofbinding
themselvesbyabill.ofexohange,f.orgedsignatures,signa.tures.of
fictiti.ouspersons.orsignatureswhichf.orany.otherreasoncannQtbind
thepers.onswh.osignedthebill.ofexchange.or.onwhosebehalfitwas
~jgned,the.obJigations.ofthe.otherpersonswlhohavesigneditshallbe
valid.
Art.742.-SignaturewithoutpO/eertoad.
Wh.osoeversignsabill.ofexchange.onbehalf.ofpersonfarwh.omthe
hadn.opowert.oactshallbeboundhimselfasapartyt.othebill'and,
ifhep.ays,shallhavethesamerightsasthepersonfarwthomhepur-
partedt.oact.Thesameruleshallapplyt.oanagentwh.oexceededhis
p.owers.
Art.743.
-
Liability.01drawer.
ThedrawerguaranteesOOIIhacceptanceandpaymeJ1Jt.Hemayrelease
himselffr.omguaranteeingacceptance.Anyprovisi.onbywhiJdhhereleases
himselffr.omtheguarantee.ofpaymentshallbe.ofn.oeffect.
Art.744.
-
Bill.01exchangeinblank.
Ifabill.ofexohange,wlhidhwasmoompltJIte.whenissued,hasbeencom-
pleted.otherwisethaninacc.ordancewiththeagreementsenteredint.o,
then.on-abservancc.ofsuchagree.mentsmayn.otbesetupagaittu>tthe
h.olderunlesshehasacquiredthebill.ofexchangeinbadfaith.or,in
acquiringit,hasc.ommitteedafault.
Art.745.
-
Ante.orpostdatedbill01exchange.
(1)Abill.ofexchangeshalln.otbenullandvaidfartihesolereason
thatithasbeenantedated.orpostdated,pr.ov.ided.tthatthereisn.o
fraud.orillegality.
(2)Apersont.owhamanintsrumentsodatedisdeliveredisdeemed
tahaveacquireditatthedate.ofdelivery.
Section2.Negotiationofbillsofexchange
1t.7-16.-Negatiability.
.
(1)Abill.ofexchanget.obearermaybetransferredbysimpledclivery
.oftheinstrument.
(2)Any.otherbi1l.ofexclhl8nge,evenifnootexpresslydraWlllt.o.order,
ma~hell'Unsfcl'l'cdbyeIHI.orsement.Whenthedra'werhasinserted
illabill.ofexchangethewards"n.ott.o.order".orsimilarwards,

172. COMMERCIAL CODE 159
theinstrumentcanonlybe,transferredaocorilimgtotheform,and
with~heeffeel'i,ofanordinaryasSlignment.
(~)Thebillmaybeendorsedeveninfavourofthedrawee,whetherhe
hasaccepteditornot,orofthedrawer,orofanyotherpartytothe
bill.
(4)Thesepersonsmayre-endorsethebill.
Art.747.
-
Elementsofendorsement.
(I)Anendorsementshallbeunconditional.Anyconditiontowhichit
ismadesubjectshallbeofnoeffect.
(2)Aparlialendorsementshallbenullandvoid.
(3)Anendorsement"tobearer"isequivalenttoanendorsementin
blank.
Art.748.-Formsofendorsement.
(1)Anendorsementshallbewritten'onthebillofexchangeorona
slipaffixedthereto(aNonge).Irtshallbesignedbytheendorser.
(2)Theendorsementmayleavethebeneficiaryunspecifiedormay
consistsimplyofthesignatureoftheendorser(endorsementin
blank).InthelaHercase,theendorsementtobevalidshallbe
writtenonthebackofthebillofexchangeorontheslipaffixed
thereto(allonge).
Art.749.
-
Effectsofendorsement.
(I)AnendorsementtransfersaNtherigdttsarisingontofabillof
exohange.
(2)Iftheinstrumentisinblank,theholdermay:
(a)filluptheblankeitherwithhisownnameorwiththename
ofsomeotherperson;
(b)re-endorsethebillinblank,ortosomeotherperson;
(c)transferthebilltoathirdpersonwithoutfillinguptheblank
andwil1houtendorsingit.
Art.750.-
Guarantee.
(1)Inl1heabseneeofanyprovisiontothecontrary,theendorserguaran-
teesbothacceptanceandpayment.
(2)Hemayprohibitanyfurtherendorsement;inthiscasehegivesno
guaranteetothepersonstowhomthebillissubsequentlyendorsed.

173. 160 COMMERCIAL CODE
Art.751.-Establishmentoftitlebyholder.
(1JThepossessorofabillofexChangeshallhedeemedtohethelawful
holderifheestablisheshistitletothebillthroughanuninterrupted
seriesofendorsements,ev=ifthelastendorsementisinblank.
Cancelled=dorsementsshallhedeemednottobewritten.Where
anendorsementinblankisfollowedbyanotherendorsemenl,t'hc
personwhosignedthislastendorsementshallbedeemedtohave
acquiredthebillbytheendorsementinblank.
(2)
W'hereapersonhasbeendispossessedofahillofexchange,inany
mannerwhatsoever,theholderwhoestablisheshisright.theretoas
providedinsub-art.(I)shallnOtbeboundtogiveupthebillunless
hehasacquireditinbadfa~thorunlessinacquiringithehas
committedafault.
Art.752.
-
Defences.
Personssuedonabillofexchangecannotsetupagainsttheholder
defencesbasedont!heirpersonalrelationswiththedrawerorwith
previousrholders,unlessthe!holder,inacquiringthebill,hasknowingly
actedtothedetrimentofthedebtor.
Al't.753.
-
Endorsementbyattorney.
(1)W;hereanendorsementcontainsthewords"valueincolleetion,"
"forcollection,""by.attorney"oranyothersimilarwordsimplying
agency,.theholdermayexerciseaUtiherightsarisingouitoftlhebillof
exchange,butheeanonlyendorseitinhiseapacityasagent.
(2)T,hepartiesliablecanonlysetupagainst~theagentdefenceswhich
couldbesetupagainsttheprincipal.
(3)TheagencygrantedbypowerofaHorneyshallnotterminateby
reasonofthedeathoftheprineipalorhisbecominglegallyincapable.
Art.754.-Endorsementinpledge.
(1)Whereanendorsementcontainsthewords"valueinsecurity,"
"valueinpledge"oranyothersimilarwordsimplyingapledge,
<theholderm.ayexercisealltherightsarisingoutofthebillof
exchange,butanendorsementby!hlimhastheeffectsonlyofan
endol'Sementbyanagent.
(2)
'Dhepel'Sonssuedonthebillmaynotsetupagainsttheholder
def!IDcesbasedontheirpersonalrelationswiththeendorserunless
theiholder,inacquiringthebill,hasknowinglyaetedto.thedNrj.
mentofthedebtor.

174. C:OMMERCIAL CODE 161
Art.75,; Endorsementaftermaturityorafterprotest.
(1)Ane-ndorsementaftermaturityshallhavethesameeffeotasanen.
({orsementbeforematurity.Anendorsementafterprotestfornon-
payment,oraftertheexpirationofthelimitoftimefixedfordraw.
ingupvileprotest,shalloperateonlyasanordinaryassignment.
(2)Unlessthecontraryisproved,anendorsementwithoutdwteshall
bedeemedtohavebeenwrittenonthebillbeforetheexpirationof
theJimitoftimejixcdfordrawinguptheprotest.
(a)Whereare£u;'altopayhasbeenevidencedbyadeclarationofthe
draweeinaccordancewithArt.781(2),anendorsementwirhout
dateshallbedeemedtohavebeenmadebeforetheprotest.
Al'l.756.
-
Presumptionastotheplaceofendorsement.
Unlessthecontmryisproved,anendorsementshallbedeemedtohave
beenwrittenonthebillattheplacewiheretheendorsemenJtisdated.
Section3.Acceptance
Art.757.
-
Presentmentforacceptance.
Untilmaturityahinofexchangemaybepresentedtothedrawecfor
acceptanceathisdomicile,eitherbytheholderorbyapersonwhois
merelyinpossessionofthebill.
Art.758.
-
Orderorprohibitionastopresentment.
(1)InanybillofexchangethedrawermaysrtipuJa,te1Ihatitbepresented
foracceptancewithorwithoutfixingalimitoftimeforpresentment.
(2)Exceptinthecaseofabillpayableattheaddressofathirdparty
orinalocalityother~hanthatofthedomicileoftlhedraweeor
ofabilldrawnpayableatafixedperiodaftersight,thedrawermay
prohibitpresentmentforacceptance.
(3)Hemayalsostipulatethatpresentmentforacceptanceslmllnot
takeplacebeforeafixeddate.
(4)Unlessthedrawerhasprohibitedacceptance,everyendorsermay
stipulatethatthebillshallbepresentedforacceptancewithor
withoutfixingalimitoftimeforpresentment.
,\rt.759.
-
Obligationtopresentforacceptancebillsofexchangepayable
litafixedperiodaftersight.
(1)Billsofexuhangepayableatafixedperiodafte.rsightshillhe
presentedforacceptancewithinoneyearoftheirdate.
12*

175. 162 COMMERCIAL CODE
(2)Thedrawermayshortenorextendthisperiod.
(3)Theseperiodsmaybeshortenedby~heendorsers.
AI,t.760.
-
Presentmentasecondtime.
(1)T,hedraweetowhomabillispresentedmaydemandthatsuchhill
bewesentedagaintohimonthefollowingday.Partiesinterestefl
maynotsetupthatthisdemandhasnotbeencompliedwithunless
suchdemand-ismentionedintheprotest.
(2)Theholdershallnotbehoundtosurrendertothedraweeahill
presentedforacceptance.
Art.761.
-
Formofaccepta~lce.
(1)Anacceptanceihlallhewrittenonthehillofexchangeandexpresscd
bytherword"accepted"oranyothersimilarwords.Itshallbesigned
bythedrawee.Thesimplesigna'tureofthedraweeonrhefaceofthe
billconstituteanacceptance.
(2)Whenthebillispayableatacertaintimeaftersightorwhenitistobe
presentedforacceptancewithinacertainlimitoftimeinaccordance
withaspecialstipulation,theacceptanceshallbedatedasoftheday
whentheacceptanceisgiven,unless~heholderrequiresthatitshall
bedatedasof'tlhedayofpresentment.Ifitisundated,theholder
inordertopreservehisrightofrecourseagainsttheendorsersandthe
drawershallauthenticatetheomissionbyaprotestdrawnupwithin
thepropertime.
Art.762.-Restrictiveacceptance.
(1)AnacceptanceisunconditionalbutthedraweemayrestrictittoparI
ofltihesumpayable.
(2)AnyoIIhermodificationintroducedbyanacceptanccinthetermsof
thebillofexchangeshallbedeemedtobearefusaltoaccept.The
acceptorshallbeboundaccordingtothelermsofhisacceptance.
Art.763.
-
Domiciliationandplaceofpayment.
(1)Wherethedrwwerofabillhasindri.catedaplaceofpaymentother
tlhanthedomicileofthedrawee'W'ithoutspecifyingathirdparIyaI
wnoseaddresspaymentistobemade,~hedraweemaynameSll(.h
,thirdpartyatthetimeofaeceptancc.InderaultofthisiIldication,
theacceptorshallbedeemedtohaveundertaken10paythehill
himselfattheplaceofpayment.

176. COMMERCIAL CODE 168
(2)IfaMIlispayableat.thedomicileof,thednwee,thelaltermay
inhisacoopta.nceindiooteanaddressintlheSamepllU!ewhere}1lIIY-
mentistobemade.
Art.764.
-
Effectofacceptance.
(1)ByacceptingthedraweeundertakestoPIIiythebillofexclutngeat
itsmaturiJty.
(2)Indefaultofpaymenttheholder,notwithstandingthatheisthe
d,rawer,mayclaimunder.thebill.ofex.cbangeagainsttiheacceptor
foralltha.tcanbedemandedinaccordancewiJtihArt.791and792.
Art.765.
-
Cancelledacceptance.
(1)Wherethedraweewhohaswrilttenihlisacceptanceonabii1ilbascan-
celleditbeforerestoringthebiH,acceptanceshanbedeemedtobe
refused.UnlessthecontraryisprovedthecancellationshaUbedeemed
tohavetakenplacebeforethebillwasrestored.
(?)Ifflhedraweehasnatifiedhisa.coopIian.eeinwritiIOgtotiheho]d~or
toanypartywho!hassignedthebill,heisliabletosuchpal'Iiiesac.
cordingtothetermsofhisacceptance.
Section4.Acceptanceforhonour
Art.766.
-
Acceptorforhonour.
(1)Pa.ymentofabillofexchangemayheguaMDteedbyanacceptance
forhonourastotheJW!boleorpartofiItsamoUllllt.
(2)ThisguaranteemaybegivenbyatIhinlpe.-son'orevenbyaperson
wthohassignedasap.amytothebill.
Art.767.
-
Formsofacceptanceforhonour.
(1)Theacceptanceforhonourshallbegiveneitheronthebinitselfor
onanallonge,orbysepa1"ateactshowingtiheplace~ itismade.
(2)Itshallbeexpressedby,the"Yords"goodasacceptamweforhonou,r"
oranyothersimilarwordsfollowedbythesignatureoftheacceptor
forhonour.
(3)Itshallbeeffeotiveonthesign8ltureoftheacceptorforhonour
placedasprovidedinsub-art.(2).
(4)AnacceptanceforiIronoul'shallspecifyfor!W1hoseaccountitisgiven.
Indefaultofthis,itshallbedeemedtobegivenfortIhedr8JWeJ.'.
Art.768.
-Effectsofacceptanceforhonour.
(1)Theacceptorforhonourshallbeboundinthesamemann,erasthe
personforwhomhehasbecomeguarantor..

177. 164 COMMERCIAL CODE
(2)Hisundertakingshallbevalidevenwhentiheliabilitywhichhchas
guaranteedisinoperativeforanyreasonotherthandefectofform.
(3)Wherehepaysabillofexchange,hemayexercisetherightsarising
outofthebillofexchangeagainstthepersonguaranteedandagainst
LhosewhoareliabletothelaUeI'onthebillofexchange.
Section5.Maturity
Art.769.
-
Categoriesofmaturities.
(I)Abillofexchangemaybedrawnpayable:
(a)atsight;
(b)atafixedperiodaftersight;
(c)atafixedperiodafterdate;
(d)atafixeddate.
(2)Billsofexchangeatothermatur~tiesorpayablebyinstalmentsshall
benullandvoid.
Art.770.
-
Billsofexchangeatsight.
(I)Abillofexchangeatsightispayableonp,resentment.Itshallbe
presentedforpaymentwitlhinayearofitsdate.Thedrawcrmay
shortenorextendthisperiod.Theseperiodsmaybeshortenedbythe
endorsers.
(2)Thedrawermaystipulatetha,tahillofexohangepayableatsight
shallnotbepresentedforpayamen'!:beforeafixeddate.Inthisease
theperiodforpreseIJJtmentshallnmfromthesaiddate.
Art.771.
-
mllsofexchangepayableatafixedperiodaftersight.
(1)ThematurityofabillofeXclhangepayableatafixedperiodafLer
sightsoollbedeterminedeitherbythedateoftheacceptanceorhy
thedateoftheprotest.
(2)Intheabsenceof,theprotest,anundatedacceptanceshallbedeemed,
sofarasregardstheaeceptor,tohavebeengivenonthelastdayof
thelimitoftimeforpresentmentforaccepLance.
Arl.772.-Calculationofperiods.
(1)Whereabillofexchangeisdrawna,toneormoremonthsa£[crdale
oraftersight,thebillshallmatureonthecorrespondingdaLeofthe
monthwhenpaymentshallbemade.Iftherebenocorrespondinf(
dale,Lhehillshallmaturc011l-helastdayofthismonth.
(2)WhenahilloCexcllangeisdrawnatoneormoremonths,andahalf
afterdate01'sight,entiremonthsshallfirstbecalculated.

178. COMMERCIAL CODE 165
(3)IIthematurityisfixedatthebeginning,inCIhemiddleoratthe
cnuoramonth,thi~$hallmeantJhefirst,fifteenthorlastdarofthe
monthrespectively.
(4)Thewords"eig1htdays"or"fifteendays"shallindiC8ltenotone011'
twoweeksbutanaetuanperiodof.torfifteendays.
(;;)
'11l1ewords''halfmon~"shallmeanaperiodoffifteendays.
Art.773.-Differencesincalendars.
(I)Whereabillofexohange,ispayableonafixeddayinaplacewere
thecalendarisdifferentfromthecalendarintheplaceofiesue,theday
ofmaturityshallbedeemedtobefixedtothecalendaroftheplace
ofpayment.
(2)Whereabillofexchangedrawn~ tJwoplaceshavingdifferent
calenda,rsispayablea1afixedperiodafJterdate,thedayofissue
shanbereferredtotheequivalentdayofthecaleudarintIhe.place
ofpaymentand'thematurityshaRbefixedaccordingly.
(3)Thetimeforpresen1ingbillsofexcihangemenbecaWuIIItedas
providedinsub-art.(1)and(2).
(4)'DhisArticleshannQtapplyifadifferentformofcalculationbas
beenexpresslyprovidedin.theinstrumeJlJtorresultsfl'OlDlthe}¥Il"
1icularsenteredtherein.
Section6.Payment
Art.774.-Presentmentforpayment.
(1)Theholderofabillofexchangepayableonafixeddayorata
fixedperiodafterdateoraftersightshallpresent,thebillforpay.
menteitheronthedayonwhichitispayableorononeof.thetJwo
businessdays.W1hiohfollow.
(2)Thepresentmentofabillofexchangeatafinancialinstitutionap-
provedbytheGovernml.mtshallamounttopreseJlJtmeJlJtforpayment.
Art.775.-Receipts.Partialpayment.
(I)ThedraweewhopaysabillofexchangeInaYrequirethatitbe
surrenderedtohimreceiptedbytheholder.
(2)Theholdermaynotrefusepartia,lpaymeJlJt.
(3)Incaseofpartialpayment,thedraweemayrequiretlhat.mention
ofthispaymentbemadeonthebillandthatareceiptthereforhe
giventohim.
(4)Paymentsmadeonaooountonthesumexpreesedinabillofex.
changeshalldischarge,thedrawerandlibeendoner.

179. 166 COMMERCIA.L CODE
(5)TheholdershallprotemlIhebillofexohangefortheremainder.
Art.776.-Paymeneinadvanceandpaymeneaematurity.
(l}Theholder01.abillofexchangecannotbecompelledtoreceive
paymemthereofbeforematUrity.
(2)Thedraweewhopaywbeforematuritydoessoathisownriskand
peAl.
(3)He'Whopaysatmaturityisva.1i.dlydischarged,unlesshehasbeen
.
guilty01.fraudorcommittedafault.Heshallbeboundtoverify
t!heregu1arMyoft1heseriesofendorsementsbutnotthesignature
of1Iheendorsers.
.
.
Art.777.-Paymeneinaforeigncurrency.
(1)WihenabillofexchangeisdraMmpayableinacurrencywhichis
notthatofthep1aceofpayment,thesumpayablemaybepaidin
theCUNeDQyof,theplaceofpayment,accordingtoiJtsvalueonthe
dateofmatumlty.Ifthedebtorisindefault,theholdermayathis
optiondeDlandthattheamountofthebillbepaidinthecurrency
oftheplaceofpaymentaccordingtotherateon,thedayofmaturity
or1Ihe'dayofpayment.
(2)Thedrawermayspecifythatthesumpayableshallbecalculated
accordingtoaralte~ iIIlthebill.
(3)Theforegoingrulessha1Jnotapplytothecaseinwhichthedrawer
hasstipulatedthatpaymentshallbemadeinacertainspecified
currency(WOWsionforpaymeIlJt.inforeigncurrency).
(4)Iftheamountofth~billofexchangeisspecifiedinacurrencyhaving
~hesamedenominMIion,butadifferentvaLueinthecountryof
issueandthecountryofpaymeDJt,referenceshallbedeemedtobe
madetothecurrencyoftheplaceofpayment.
Art.778.-Deposu.
Whenabillorexchangeisnotpresentedforpaymentwithinthelimit
oftimefixedbyArt.774,anydebtorisaullhorised,todeposittheamount
wiJtihafinancialinstitutionapprovedbytlheGovernmentattheoharge,
riskandperiloftheholder.
Art.779.-Oppositiontopayment.
Payimetrtmayonlybeopposedinthecaseoflossofthebillofexchange
orthebankruptcyoftlhe.holder.

180. COMMERCIAL CODE 167
Sedion7.Recourseforlion-acceptanceornon-payment
Art.730.
_u
Recourseoftheholder.
TheIlmldcrmayexel'cisehisrightofrecourseagainstt!heendorsers,the
IIt'awerandotherpal-tiesliable:
(1)atmaturity,Iwherepaymenthasnotbeenmade;or
(2)beforematurity:
(a)iftherchasbeentotalorpartialrefusaltoaccept;or
(h)inthccvcntorbankruptcyofthedrawee,whetherhehiasac-
ceptedornot,orin~heeverutofastoppageofpaymerutonhis
partevenwhennotdeclaredbyajudgment,orwhereexecution
hasheenleviedonhisgoodswithoutresult;or
(c)intheeventofbankruptcyofthedrawerofanon-
acceptablehill.
Art.781.
-
Protest.Conditionsandperiods.
(1)Defaultof
drawnup
payment).
(2)Adateddeclaration,wl.'ittenonthebillitselfmayreplacethisdeed.
exceptwherethedrawer,inthetextof;thebillitself,stipulatesfora
protestbydededrawnupbyapublicofficer.
(3)Protestfornon-acceptanceshallbemadewithin1J1lClimitoftime
fixedforpresentmeru'tforacceptance.Where,inthecasep,rovided
inAl.'t.760(I),;thefirstpresentmenttakesplaceonthelastdayof
thattime,rheprotestmayhedrawnupon,thenextday.
(4)Protestfornon-paYlmentofabillofexchangepayableonafixed
dayoratafixedperiodaftersightshallbemadeononeofthetwo
workingdaysfollowingthedayonwIh~(JhthebillisPlIIYablc.Inthe
caseofabillpayableatsight,theprotestshallbemadeasprovided
insub-art.(3).
(5)Presentmentforpaymentandprotestfornon-paymentshallnothe
necessal1YW)hereprotestfornon-acceptanceismade.
(6)Wherethedrawee,Wlhetherhehasacceptedornot,hassuspended
paymentorwhereexecutiononlhisgoodshasbeenunsuccessful,the
holdermaynotexercisehisrightofrecourceuntilafterpresent-
mentofrbebilltothedraweeforpaymentandaftertheprotesthas
beendrawnup.
(7)Wherethedrawee,
rUl'l,orwherethe
acceptanceorofpaymentshallbeevidencedbyadeed
byapublicofficer(protestfornon-acceptanceornon-
whetherhehasacceptedornot,isdeclaredbank-
drawerofanon-aceel)tablebillisdeclaredbank-

181. 168 COMMERCIAL CODE
rup,t,theproductionofthejudgmentinbankruptcyshallcnablethe
holdertoexercischisrighLofrecourse.
Art.782.-Responsiblepublicofficer.
Aprotestshallbednllwnupbyanotaryorhyacourtregistrar.
Art.783.
-
Placeofdrawing-upoftheprotest.
Aprotestshallbedrawnup,inonedocument:
(a)atthedomi~ileof1ihepersononwhomthebillofexooangewas
p.ayableorathislastknowndomicile;
(h)atthedomicileofthepersonsspecifiedonthebillofexchangeas
payingitinneed;
(c)at1111'domicilcoftheIhirdpartyhavingAccepledbyint!vention.
Art.784.
-
Requirements.
(1)Aprotestshallcontain:
(a)1ihenameof1ihepersonorbusLinessorganisationforandagainst
whomitisdrawnup;
(b)astatementthatthepersonorbusinessorganisationagainstwhiclh
theprotestisdrawnuphavebeenunsuccessfullysummonedto
satisfytheentitlementarisingoutofthebillofexchange,or
thattheyeannotbefound;
(c)theplaceanddayonwhichthesummonswasmadeorunsuccess-
fullypresented;
(d)thesLignatureofthepersonwhohasdrawnuptheprotest.
(2)Anypartialpaymentshallbestatedintheprotest.
(3)Wiherethedraweetowhomabillofexchangeispresentedforaccep-
LancerequiresthatasecondpresenLmentbemadeonthedayafter,
thi"reque"tshallbeenteredinthepratest.
Art.785.
-
Formoftheprotest.
(1)Aprotestshallbedrawnupbyseparateactandatachedtothebill
ofexchange.
(2)Wheretheprotestisdrawnuponpresentmentofidenticalpartsof
thesamebillofexchangeoroftheoriginalandacopyofthebill,
itshallbeattadhedtoanyofthepartsortotheoriginalbill.
(3)Anotetothiseffectshallbemadeontheotherpartsoronthecopy.
Art.786.
-
Partialacceptance.
Whereacceptanceislimitedtoap,artoftheamountandaprotestis
drawnuptothiscffel't,acopyofthehillshallbemadeandtheprotest
writtenonthiscopy.

182. COMMERCIAL CODE
169
Art.737.
-
Copyof/heprotest.
ThepublicoJlieorw:]whasdrawnupthepl'otestshallmakeacopyIJhereof
whichshallcontain:
(a)rheamQuntpayaWe;
(1)thedateQfmaturity;
(c)theplaceanddateQfissueQftihehillQfexchange;
(d)rhedrawer,thedr3IWce,andthe~rsonofbusinessorganisationto
whomOIl'towhascOIl'del'paymen.tshauldhemade;
(c)thepersonOIl'businessorganisation.requiredtQpay,ifnol:thedrawee;
(f)thosepersonsdesignatedashavingtapayincaseofneedandpersons
acceptingbyintervention.
Art.788.-Notice.
(I)TheholdershallgivenaticeQfnan-acceptanceOIl'nan-paymentta
hisendorserand,tathedrawerwithinthefour'workingdays,wlMch
follQwthedayafpl"otestOIl',incaseofaprovision"retoursans~rais,"
thedayofpresentment.
(2)Thepublicafficerwhahasdrawnupthe.protestshallinformin
"TiLingthepersanshound1y,~he1iIlofexclhange~ addressesarc
eitherspeoifiedonthe1iIlafexcthangeorknowntothepublicofIiecr
OIl'speoifiedbythepersonsil:uavingrequiredtheprotest.Theexpenses
arisingoutofsuchnoticeshallbeaddedtothecostsoftheprotest.
(3)EveryendorsershallwithinthetWQwQrkingdaysfollowingthe
dayan'whiohhereceivesnotice,noti£yihIisendorserofthenotice
Ihchasreceived,mentioningrhenamesandaddressesof,thasewha
havegiventhepreviausnotices,andsoonthroughtJheseriesuntil
thedrawerisreached.Thep.eriodsmenrtionedaboveshallrunfrom
thereceiptoftheprecedingnolIice.
(4)Whereinaccordancewirhsub-art.(3)noticeisgiven,tQ
apersan
whahassigneda1iIlQfexohange,thesamenoticeshallbegiven
willhinthesamelimitQftimetQhisacceptorfOIl'honQur.
(5)Whereanendorsereitherihasnorspecifiedhisaddressorhasspeci-
fieditinanillegihlemanner,noticeshallhegiventa,thepreceding
endorser.
(6)ApersonrequiredtagivenoticemaygiveitinanyformOIl'1y
returningthehiIlQfexchange.
(7)
Ill'shallshawthathehasgivennOlticewiduntheprescribedtime.
Thistime-limitshallbedeemedtohavebeenQhservedifalettergiving
thenOLicehasbeenpastedwithintheprescribedtime.

183. l7{) COMMERCIAL CODE
(8)Apersonwhodoe.nQtgiyen<Jticewithintheprescribedtimeshall
notforfe~thisrights.111'
sl.,,11helialtleforthedalllagc,ifany,c.aus-
cdbyhisnegligence,hut~hedamagesshallnotexceedtheamount
ofthehillofexohange.
Art.789.
-
Provision"sansprotet".
(l)Thedrawer,anendorseroracceptorforhonourmay,bytheprovi-
sion"retoursansfrais,""sansprotet"oranyothersimilarwords
writtenontheinstnllllentandsigned,releasetheholderfromhaving
aprotestofnon-acceptanceornon-paymentdrawnupinorderto
exercisehisrightofrecourse.
(2)11hisprovisionshallnotreleasetheholderfrompresentingthebill
withintheprescl"ibedtime,norfromthenoticesheisrequiredto
give.Theburdenofprovingthenon-observanceofthelimitsoftime
liesonthepersonwhoseekstosetitupagai:lUlttheholder.
(3)Wheretheprovisioniswrittenby!JIledrawer,itsihallbeeffective
agamstallpersonswhohavesignedthebill;'<whereitiswrit,tenby
anendorseroracceptorforhonour,itsluillbeeffectiveagainstsuch
endorseroracceptOrforhonour.
(4)Where,mspiteoftheprovisionwriJttenbythedrawer,theholder
hastlheprotestdrawnup,heshallbear~heexpensesthereof.Where
theprvoisionhasbeenwrittenbyanendorseroracceptorforhonour,
1Jhecostsof,theprotest,ifany,mayberecoveredfromallthepersons
whiohavesignedthebill.
Art,790.
-
Jointandseveralguaranteeofpersonsboundbybill.
(l)AIldr3lWers,acceptors,endorsersoraceept01''Sforhonourofabill
ofexchangeshallbejointlyandseverallyliabletotheholder.
(2)Theholdermayclaimagainstallthesepersonsindividuallyorcol-
lectivelywithoutbeingrequiredtoobservetheorderinwlhichthey
havebecomeliable.
(3)Anypersonsigningthebillwhohastakenitupandpaidithasthe
samerigbt.
(4)ProceediJngsagainstoneoftheplU"tiesliahleshallnotbarpl'occerl-
ingsagainsttheothers,eventhoughtheymaybesubsequenttothe
p8l"tyfirstproceededagainst.
Art.791.-
Extentoftherightofrecourseoftheholder.
(1)11heholdermayrecoverfromthepersonagainstwhomheexercises
hisrightofrecourse:

184. COMMERCIAL CODE 171
(a)theamOll!JtoftheUlli1{"('pl'ted01'unpaidbillofcxchau;;cwith
intere~t,ifinlcn'sthasheellprovidedfor;
(h)interestatthelegalratefromthedateofma.turity;
(c)theexpensesofprotestandofthenoticesgivenaswe]]asolher
expenses;
(d)acommissionnotexceedi11gonethird~r('Bnt.
(2)Wheretiherightofrecourseisexercisedbefol'ematurity,theamount
ofthebillshallheHlhjecttoadiscount",hid,shallhecalcuJated
aooordingtotheo/licialrateofdiscountruUllgOilthedatewhell
recourseisexercisedattheplaceofdomicileoftheholder.
Art.792.-Extentoftherightofrecourseofapersonwhotakesup((lidpoys,
Apartywhotakesupandpaysahillofexchangecanrecoverfromihi'
partiesliabletohim:
(a)theentiresumwhiohhehaspaid;
(b)interestonthesaidsumcalcula.tedatthelegalrate,startingfrom
thedaywihenhemadepaymenlt;
(c)anyexpenseswhidhhehasincurred;
(d)acommissionnotexceedingtwopermille.
Art.793.
-
Righttosurrenderofthebill,totheprotestandareceiJIII'r/
account.
(1)AnypartyagainstwhomarightofrBCourseisormay
mayrequireagainstpaymentthatthebillbesurrendered
theprotestandareceiptedaceount.
(2)Anyendorserwhohastakenupandpaidabillofexdhangemay
cancelhisownendorsementandthoseofsubsequentendorsers.
beexercised
tohimwitlt
Art.794.
-
Rightofrecourseafterpartialacceptance.
(1)Wheretherightofrecourseisexercisedafterapartialacceptanec
thepartywhopaysthesuminrespootofwhichIiliebillhasnotbeen
acceptedmayrequirethatthispaymentbe~pecifiedonthebilland
thathebegivenareceipttherefor.
(2)TheholdershaHgivehimacertifiedcopyofthehill,togothcr\,iil,
theprotest,inordertopermitsubsequentrecoursetobeexcrcised.
Art.795.
-
Redraft.
(1)Anypersonhavingtherightofrecoursemay,intheabsenceof
,~greementtothecontrary,rBimbursehimselfbymeansofafre~h
bill(redraft)10bedrawnatsightononeofthep.arliesIiaI,Ieto
himandpayableattIredomicileofthatparty.

185. 172 COMMERCIAL CODE
(:::)Th",.[<'<lrAfl)'HHi11nI
"'.1ill
<Jc!ditkl11tothe8um3I11~nti~'nerlill
.\1'1.',"11,1".1"'I~."r..kel''';;'',,,,,I
.',1""'['
dntytoliepaid011thercdmft.
(:1)1£theredraftisdrawnbytheholder,Lhesumpayableshallhefixed
accordingtotherateforasightbilldrawna.ttheplacewhercthc
originalbiUwaspayableuponthepal.tyliableatvheplaceofhis
domicile.
(,t)Iftheredraftisdrawnbyanendorser,thesumpayableshallbe
fixedaccording10theralcforasightbilldrawnattheplacewhere
~hedrawerofthercdraftisdomicileduponthep.laceofdomicile
ofthepartyliahle.
Art.796.
-
Lossofrightsofrecourse.
(1)Aftertheexpirationofthelimitsoftimefixedfor,thepresentment
ofabillofeX(Jhangedrawnatsightoratafixedperiodaftersightor
fordrawinguptheprotestfornon-aooeptanceornonpaymentorfor
presentmentforpaymentinthecaseofaprovision"retoursansfrais,"
theholderloseshisrightsofrecourseagainstendorsers,againstthe
<!,rawerandagainsttheotherpartiesliable,withtheexeptionofthe
acceptor.
(2)Indefaultofprcsentmentforacceptance;w1i\!hinthelimitoftimc
stipulatedbythedrM'.J }'olderlosesihisrightofrecoursefor
non-payment,aswellasfornon-acceptance,unlessitappearsfrom
thetermsoftheprovision,thatthedraweronlymeanttorelease
himselffromtheguaranteeofacceptance.
(3)Wheretheprovisionforalimitoftimeforpresentmentiscontained
inanendorsement,theendorseralonecanavailhimselftlhereof.
Art.797.
-
Forcemajeure.
(1)Wherethepresentmentofthehillofexchangeorthedrawingup
oftheprotestwithintheprescribedtimeisabsci,
t:'
yprevented
(legalprohibitionbyanyStateorothercasesofforcemajeure),these
limitsoftimeshallheeJ\itended.
(2)'I1heilroldershallgivenoticewithoutdelayofthecaseofforccma-
jeuretohisendorserandspecifythisnotice,whichheshalldateand
sign,onthebilloronanallonge;inotherrespeatstheprovisionsof
Art.788shallapply.
(3)Whereforcemajeurehasterminated,jjheholdershallwiJthoutdelay
presentthehillofexchangeforacceptaneeorpAymentand,where
necessary,drawuptheprotest.

186. COMMERCIAL CODE
173
(4)
Wib'ereforcemajeurecontinues
to'O'pera'tebeyond1ihtirtydaysa£ter
maturity,recaursemayheexercised,andneicl1erpresentment
110'1'thedrawingupofIIprotestshallhenecessary
0
(5)Inthecaseafhills
O'fexchangedrawnatsight
0'1'atafixedperiod
aftersight,thetimelimitO'fthhotydaysshallrunfromthedateon
whiohrtlheholder,evenbefO'retheexpiration
O'fthetimeforpresent.
ment,hasgivennotice
O'fforcemajeure
to'hisendorser.In,thecase
afhillsofexchangedrawnatacertaintimeaftersight,theabove
time-limitofthirtydaysshallheadded
to'theperiodaftersight
specifiedinthebillofexohange.
(6)Faotswhicharcp,urelypersanal
to'thehO'lder
0'1'to'1ilreperson
entrustedwiththepresentment
O'fthebilI
0'1'drawingupO'fthe
protestshallnatbedeemed
to'constitutecasesofforcemajeure.
Art.798.
-
Sequestration
ofthemovableproperty
ofpartiesboundbybill.
Apartfromtheconditiansprescribed
fO'rlilliebringingofproceedingsfor
guarantee,,theholderafahillofexahlllnge
whO'hasprotestedfornon.
p,aymentmay,withthepermissionof,tihecourt,attaohthemovableproperty
oft'hedrawers,acceptorsandendorses.
Art.799.
-Proceedingsforunlawfulenrichment.
(1)
Thedrawerandtheacceptarshallheliabletotheholderup
to'the
amountafthesumbywhiahvheyhaveunlawfullye=iohedthem-
selvesathisexpense,evenwherel'heirobligaltionsunderthehillof
eXdhange~ave terminatedbyreasonofextinctiveprescription
0'1'limitatianafactions.
(2)Proceedingsforunlawfulenrichmentmaybebroughtagainstthe
drawee,thethirdparty
atwhO'sedomicHethebillispayableand
theperson
0'1'businessO'rganisatiO'nanwhosebeh.llfthebillwas
drawn.
(3)EndorserswhoseO'iJligatiO'nshaveterminatedcannO'themadethe
subject
O'ftheseproceedings.
(4)TheseprO'ceedingsmaynatbebroughtunlesstllehO'ldercannot
bringcausalprO'ceedings.
Art.800.
-Reservationafcausalpraceedings.
(1)The1'l'Ocec(lingsarisingoutO'ftbelegalrelat,io.nsonIWlhidhtheissue
0'1'transferofthebillO'fexchangeisbasedshallsubsist,unlessitis
pravedthattherehasbeennovation.

187. 174 COMMERCIAL CODE
2)Theseproceedingscanonlyhebroug\1.tifnon-acceptanceornon-
paymenthasbeenevidencedbyaprotest.
(3)TheiholdermaynotbAngcausalproceedingsunlessheofferstore-
toretothedebtorthebillofexchange,atthesame1Iimedepositingin
withthecourtregistrar,aftersatisfying~henecessll1'yformalitiesfor
preservingtothedebtorsHahproceedingsbywayofrecoursewhich
thelattermaybeentitledtobring.
Art.801.
-
Coverforabillanditstransfertosllcceedingholders.
(1)Ahillofexchangeiscoveredwhenatmaturitythedraweeisinpos-
sessionofsecuritiesorguaranteessufficienttofullycoverthehill
andwhicharcintendedhythedrawerortheprincipaltosecurethe
paymentofthebill.
(2)W!herethedrawerishankrupt,thecivilproceedingswlMchhecould
havebroughtagainstthedraweeforrestitutionofthecoverorrepay-
mentoftheamountsbywhioothelatter'wasorediteddevolveupon
theholderofthebillofexc:hange.Therighttobringtheseproceed-
ingsistransmittedtosucceedingholdersbyWIllyofendorsement.
(3)Whereadrawerdeclaredbankrupthasendorsedthebillofexohange
andhassetupthecoverduringthesuspectedperiod,tlheprovisions
ofsuh-art.(2)shallnotappl,y.
(.1,)Thedebtarisingoutoftlhecoverillthehandsofthedraweeatthe
timethataclaimcanbemadeonthebillofexchangeispreferredas
regardstlhecreditorsofthedrawer.
(5)T,hedraweemaynotreleasehimselffromthecoverwheretheholder
prohibits~1limfromdoingso.Thisprohibitionmlaybemadeby
registeredleMerfollowedbythebringingofproceemngwithinfifteen
daysfromtlhedateofmatur~ty.Aprmestfornon-paymentisequivalent
toaprohibitionunderthisArticle.
Section8.Interventionforhonour
Art.802.
-
GeneralpTovisions.
(l)11hedrawer,anendorseroranacceptorforhonourmayspecifya
personwhoistoacceptorpayincaseofneed.
(2)Abillofexchangemay,subjootashereinaftermentioned,heaccepted
orpaidhyapersonwhointe.rvenesforrho!honourofanydebtor
al~ainstIW'hom11rigohtofrt'{~ourseexists.
(3)1~hepersoninterveningmayheat!hil'dpal'ty,evenUledrawee,01:,-
savetheacceptor,apartyalreadyliableonthebillofexchange.

188. COMMERCIAL CODE 175
(4)Thepersoninterveningisboundtogive,withintwoworkingdays,
noticeofhisinterventiontol1hepartyfor'whosehonourhehas
intervened.Indefault,he~\lallbeIi-ableforthedamage,ifany,due
tohisnegligence,butthedamagesshallnotexceedtheamountof
thehillofexdhiange.
Art.803.
-
Acceptancebyintervention.Conditions.Positionoftheholder.
(1)Acceptancebyinterventionmaybegiveninallcaseswherethe
holderhasarightofrecoursebeforematurityonabillwhichis
capableofacceptance.
(2)WJterethehillofexchangespecifiesapersonwhoisdesignatedto
acceptorpayitincaseofneed811:theplaceofpayment,<IIheholder
m~notexercisehisrightsofrecoursebeforematurityagainstthe
personnamingsuchrefereeincaseofneedandagainstsubsequent
signatories,unlesshehaspresented-l1hehillofexchangeto,thereferee
incaseofneedanduntil,ifacceptanceisrefusedbythelatter,this
refusalhasbeenaU1!11lenticatedbyaprotest.
(3)Inothercasesofinterventiontheholdermayrefuseanacceptance
byintervention.Whereheallowsit,heloseshisrightofrecourse
beforematurityagainstthepersononwhosebehalfsuchacceptance
wasgivenandagainstsuhsequentsignatories.
Al't.804.-Forms.
Acceptancebyintervention~llbespecifiedonthebillofexchange.It
shallbesignedbythepersonintervening.Itshallm~ntiontheperson
\orwhosehonourithasbeengiven.Indefaultofsuohmeution,the
acceptanceshallbedeemedto,havebeengivenforthehonourofthe
drawer.
Art.805.-Obligationsoftheacceptor.Positionastorightofrecourse.
(I)'I1heacceptorhyinterventionisliahletotheholderandtothe
endorsers,subsequentto,thepartyfor.whosehonour!heintervened,in
thesamemannerassuchpMlty.
(2)Nol!wIithStandinganaooeptancebyintervention,thepersonforwhom
ithasbeengivenandtheacceptorsforhonourmayrequirert!heholder,
inexdhlangeiforpaymentofdIesummentionedinArt.792,todeliver
thebill,theprotestandareceiptedaccount,ifany.
Art.806.
-
Paymentbyintervention.Conditions.
(I)Paymentbyin.tervl.mtiollmay,lakeplat'cinallcaseswhere,eitherat
maturityorheforematurity,vileholderhasarightofrecourseon
thebill.

189. 176 COMMERCIAL CODE
(2)Paymentshallinclude11heWlholemnoUDItpay8blebythepartyfor
wIbosehonourIiitismade.
(3)1tsbaYbemadeatthelatestonthedayfollowingthelastday
allowedfordraiwinguptheprotestfornon-payment.
Art.807.
-
Obligationsoftlu!holder.
(I)Whereabillofexchangehasheenacceptedbypersonsintervening
whoaredomiciledinrheplaceofpayment,orwherepersonsdomiciled
Iilierelhavebeennamedasrefereesincaseofneed,theholdershall
presentthebilltoalltlhesepresonsand,IW!herenecessary,havea
protestfornon-paymentdrawnupatthelatestonthedayfollowing
thelastdayallowedfordrawinguptheprotest.
(2),Indefaultofprotestwithinthislimitoftime,thepal'tywhohas
namedtlherefereeincaseofneedorforwhoseaccount11hebillhlas
beenaccepted,andthesubsequentendorsers,shallbedischarged.
Al't.808.-
Consequencesofrefusal.
Theholderwhorefusespaymentbyinterventionshalllosehisrightof
recourseagainstanypersonwhowouldhlavebeendischarged,thereby.
Art.809.
-
Righttodeliveryoftlu!bill,t.heprotestandth6receipt.
(1)Paymentbyinterventionshallbeauthenticatedbyareceiptgiven
onthebillofeJWhangementioningthepersonforwhoeehonour
paymenthasbeenmade.Indefaultofsudhmention,paymentshall
hedeemedtohaveheenmadeforth.ehonouroftihedrawer.
(2)l1hebillofexclmngeandtheprotest,itany,shallbesurrenderedto
thepersonpay;ingbyinterv=tion.
Art.810.-
Transferofrightsoftheholder.Competitionforpaymentby
intervention.
(1)T,J1epersonpaylingbyinlerventionshallacquiretlherightsarising
outofth.ebillofeXdhangeagainstthepartyforwhosehonourhe
:haspaidandagainst'personswhoa,reliabletothelatteronthebill
ofexchange.Hemaynotre-endorset!hePillofexohange.
(2)Endorserssubsequenttothepal'tyforwhosehonourpaymenthas
beenmadeshallbedisdharged.
(
.3)Inthecaseofcompetitionforpaymenthyintervention,thepayment
whicheffectsthegreaternumberofreleaseshastnepreference.Any
personwho,wirhknowledgeofthefacts,intervenesinamanner
contrarytothlisruleshalllosehisrightofrecourseagainstthosewho
would!haveheendischarged.

190. COMMERCIAL CODE 177
Section9.Partsofasetandcopies
Art.811.-Partsofaset.Righttoseveralparts.
(])
AbiIlofexohangemaybedrawninseveralideThticalparts.
(2)Thesepartsshallhenumberedinthebodyoftheinstrumentitsclf
oreaahpaTtshallberegardedasaseparatebillofexchange.
(3)EveryhQJderofabillwhichdoesnotspecify1!hllltithasbeendrawn
asasolebillmay,athisownexpense,requirethedeliveryofseveral
paNs.Forthispurpose,heshallapplytohisimmediateendorser
whoshallassisthiminproceedingagainsthisownendorser,and
sooninthesel"iesuntilthedrawerisreadhed.Theendorsersshall
reproducetheirendorsementsonthenewpamoftheset.
Art.812.
-
Relationbetweenpartsofaset.
(I)Paymentmadeononepartofasetoperatesasadischarge,even
thoughthereisnoprovi~ionthatIJhispaymentannulstheeffectof
tJheotherparts.ThedraJWeeshallbeliableoneachacceptedpart
whichhehasnotrecovered.
(2)Anendorserwhohastransferredpartsofasettodifferentpersons,
aswellassubsequentendorsers,shallbeliableonalltihepartsbear.
ingtheirsignaturewlhich,havenotbeenrestored.
Art.813.
-
Sw.iementastoacceptance.
(I)Apartywlhobassentonepartforacceptanceshallspecifyonthe
otherpmsthenameofthepersoninwIIrosehands1!Wpartisto
befound.Thatpersonshallsurrenderittothelawfulholderofan.
otherpart.
(2)Whereherefuses,rheholdermaynotexercisehisrightofrecourse
untilhehashadaprotestdrawnupsp.ooifying:
(a)thatthepa!'tseThtforacceptancehasnotbeensurrenderedtohim
onhisdemand;
l
b)thataceeptanceorpaymentcouldnotbeobtainedofanother
part.
Art.814.-Formandeffects.
(I)Everyholderofabillofexohangehas,therighttomakecopiesofit.
(2)AcopyshallreproducetheorigionalexaotlywithlIheendorsements
andallotherstatementstherein.Itshallspecifywherethecopyends.
(3)Itmaybeendorsedandguaranteedbyacceptanceforhonourinthe
samemannerandwiththesameeffectsastheoriginal.
13*

191. 178 COMMERCIAL CODE
Art.815.-Deliveryoftheonginat.
(1)Acopyshallspecify,thepersoninpossessionoftheoriginalinstru-
ment.Thela~tershallhandover1Jhesaidinstrumentto1Jhelawful
holderof1ihecopy.
(2)Whereherefuses,theholdermaynotexerci!'6hisrightofrecourse
against1;hepersonswhohaveendorsed1ihecopyorguaranteeditby
acceptanceforhonouruntilhehashadaprotestdrawnupspecifying
thattheorig.inal!hasnotbeensut;renderedtohimonhisdemand.
(3)Where1iheorigin8ilinstrument,Miter",helastendorsementbeforethe
makingofthecopy,containsaprovision"commencingfromhere
anendorsementisonlyvalidifmadeonthecopy"oranyothersimilar
~rds,asubsequentendorsementontheoriginalshanbenulland
void.
Section10.Alterations
Art.816.-Extentoftheobligationsofsignatories.
Incaseof8ilJterationofltIhe,textofabiillofexchange,partieswhohave
signedsubsequenttothealterationsha1J.beboundbythetermsofthe
alteredItext;partieswhohavesignedbeforetlhealterationshallbebound
bydietermsoftheoriginaltext.
Section11.Limitationofactions
Art.817.-Periods.
(1).Allacliionsari.singoutofabillofexchangeagainst",heaocepto;rshall
bebarredMitertihreeyearsfromthedateofmaturity.
(2)AationsbytheihJolderagainst1!Mendorersandagainsttihedra:wer
8ba1lbebarredait~roneiyearfromthedateofaprotestdrawnup
wi1Jbinpropertime,orfromthedateofmaturitywherethereisa
provision"retoursansfrais."
(3)Actionsbyendorsersagainsteachotherandagainstthedrawershall
bebarredaiitersixmonthsfrom111Mday'Whentheendorsertookup
andpaidthebillorfromthedaywhenhehimselflWassued.
(4)LimitationshaUrun,in.thecaseoflegaJproceedings,fromthedate
oftheconclusionofthelastproceedings.
(5)LinUtationshallnotapplywlberejudgmenthasbeenpronouncedor
ifthedebtihasbeenacknowledgedbyseparateact.

192. COMMERCIAL CODE 179
Al't.818.-lnterruption.
(1)Theperiodoflimitationshallbeinterruptedbythebringingofan
action,bynoticebeinggivenofathirdpartyactionorbylodginga
claiminbankruptcy.
(2)Interruptionoftheperiodoflimi,tationisonlyeffectiveagainstthe
personinrespectofwhomthepel'iodhasbeeninterrupted.
(3)Wheretheperiodoflimitationisinterrupted,afurtherperiodofthe
samedurationshallbegintorun.
Section12.Generalprovisions
Art.819.
-
Timelimits.Holirkys.
(1)Paymentofabillofexchangewhichfallsdueonapublicholiday
cannotbedemandeduntilthenextworkingday.Anyotherproceed-
ingsrelatingtf)billofexchange,inpal'tioularpresentmentfor
acceptanceandprotest,canonlybetakenona!WOrkingd8iY.
(2)Whereanyoftheseproceedingsmustbetakenwi1!hinacel'tainlimit
oftimethelastdayofwlhiohisapublicIholiday,thelimitoftime
isextendeduntilthefi.rstworkingdaywhicihfoLlowsItheexpiration
ofthattime.Holidayswhichoccurduringtheperiodshallbein-
cludedincalculatinglimitsoftime.
Art.820.
-
Daysregardedasofficialholidays.
Dayson'WIhioh,undertlheprovisionofthelawsinforce,nopaymentcan
berequirednoranyprotestdrawnup,shallbedeemedtobepublic
holidays.
Art.821.-Calculationoftimelimits.
Legalorcontractuallimitsoftimeshallnotincludethedayonwhichthe
periodbeginstorun.
Al't.822.-
Prohibitionofdaysofgiace.
Nodayofgracemaybegranted.
Chapter3.PromissoryNotes
Art.823.-Requirements.
Apromissorynoteshallcontain:
(a)theterm"promissorynote"insertedinthebodyofthe
andexpl'essedinthelanguageemployeedindrawingup
ment;
instrument
theinstru-

193. 180 COMMERCIAL CODE
(b)anunoonditionalpromisetopayasumcertaininmoney;
(c)the,timeofpay,ment;
(d)theplaceofpayment;
(e)thenameoftheperson,towhomorto!Whoseorderpwymentistoh~
madeorastatementthatthenoteispayabletobearer;
(f)thedate,whenandplacewlhere1100noteisissued;
(g)thesignMureof1Ihepersonw:hoissuestheinstrument(maker).
Art.824.-Requirementsabsent.
WhereanyoftherequirementsprovidedinAm.823isabsent,theinstru-
mentshallnotbevalidasapromissorynoteexceptintJheoasesspecified
insub-al't.(a),(b)and(c)hereunder:
(a)apromissorynoteinwhiohthetimeofpaymentisnotspecifiedshall
bedeemedtobepayableatsight;
(b)unlessotherwiseexpresslyspecified,theplacewheretheinstrument
ismadeshallbedeemed,tobebotht1heplaceofpaymentandthe
placeofthedomicileofthemaker;
(c)&promissorynatewhichdoesnotmention1Ih:eplaceWlh.ereitwas
madeshallbedeemedtohavebeenmadeintheplacementioned
besidetllhenameofthemaker.
Am.825.-Referencetoprovisionsrelatingtobillsofexchange.
(I)Thefollowingprovisionsrelatingtobillsofexchangeshallapplyto
promissorynotesinsofarastheyarenotinconsistentwiththenature
oftiheseinstruments:
(a)endorsement(Al1t.746-756);
(b)timeofpayment(Art.769-773);
(c)recourseincaseofnon-payment(Art.780-793,795-797);
(d)protests(Al't.781-791);
(e)red:refts(Am.795);
(f)paymentbyintervtmtion(Art.802,806.810);
(g)copies(Art.814and815);
('h)alterations(Art.816);
(i)limitation01.actions(Art.817and818);
(j)holidays,calculationoftimelimitsandprohibitionofdaysof
grace(Art.819-822).
(2)Thefollowingprovisionsshallalsoapplytop~ry notes:the
provisionsconcerningahiIIofexdhiangepayablea,t,theaddressofa
thirdpaRyorinalocalityotherthanthatofthedomicileofthe
drawee(Art.738and763);stipulationforinterest(Art.739);discre-

194. COMMERCIAL CODE 181
panciesasregardsthesumpayable(Art.740);thecolUlequeoeetlof
signatureundertheconditionsmentionedinArt.741;theconsequen-
cesofsignaturebyapersonwhoactswithoutauthorityorwIhoexceeds
hisauthority(Art.742);andtheprovisionsregardingbillsofexchan.
geinblank(Art.744).
(3)ThefollowiJngprovisionsshallalsoapplytopromis50l1ynotes:provi-
sionsrelatingtoacceptanceforhonour(Art.766-768);inthecase
providedforinArt.767(4),wheretheacceptanceforIhonourdoes
notspecifyonwhosebehalfhhasbeengiven,itshanbedeemedto
havebeenI#venonbehalfofthemakerofilhepromissorY'note.
Art.826.
-
Liabilityofmaker.Presentmentandtimeaftersight.
(1)Themakerofapromissorynoteshallbeboundinthesamemanner
asanacceptorofabillofexchange.
(2)Promissorynotespayableatacertaintimeaftersightshallbepre-
sentedfortheviaaofthemakerwithintihelimitsoftimefixedby
Art.759.Thelimitoftimeshallrunfromthedateofthevisasigned
bythemakeronthenote.Therefusalofthemakertogivehisvisa
withthedatethereonshallbeautihenticatedbyaprotest(Art.761),
thedateofwhichmarksthebeginning
-
ofthe~od oftimeafter
sight.
Chapter4.Cheques
Section1.Drawingandformofacheque
Art.827.
-
Requirements.
Achequeshallcontain:
(a)anunconditionalordertopayasumcertaininmoney;
(b)thenameofthepersonwihlOistopay(drawee);
(c)theplaceofpayment;
(d)thedatewhenandtheplacewherethechequeisdrawn;
(c)thesignatureoftheper~ni<whodrawsthecheque(drawer).
Art.828.
-
Requirementsabsent.
WhereanyoftherequirementsmentionedinArt.827isabsent,theinstru-
mentshallnotbevalidasachequeexceptinthecasesprovidedinsub-
art.(a)and(b)hereunder:
(a)unlessotherwiseexpresslyprorided,tbplacementionedunderthename
ofthedraweeshanbedeemedfGbe,theplaceofpayment.If&everal
placesarementionedunderthenameof-thedrawee,thecheque1Ih8Jlbe
payableatthefirstplacementioned;

195. 182 COMMERCIAL CODE
(b)intheabsenceufthe:>estatements,andofanyotherindication,the
chequeshallbeparableattheplacewherethedraweehashisprincipal
establishment.
Art.829.
-
Specificationofthedrawee.
Achequemayonlybedrawnonabankeroronaninstitutionorestabli~h.
mentregardedbylawasabanker.
Art.830.
-
Previouscovel'.
(])
Adllequemayonlybeissuedifthedrawerhasfundswiththedrawee
andillaccordancewithanexpressorimplicdagreementunderwhich
thedrawerhastherighttodisposeofthesefundsbycheque.Theva.
lidityofthechequeshallnotbeaffectediftheseprovisionsarenot
compliedwith.
(2)Incaseofrefusalthedrawershallprovethatthedraweeiheld(JOverat
thetimeofissueoftheinstrument.Ifnot,heshallguaranteeitirres-
pectiveofwhethertheprotestwasmadeafterthelimitsoftimefixed.
Al't.831.-
Prohibitionastoacceptance.
Achequecannot!;eaccepted.Astatementofacceptanceonachequeshall
bedisregarded.
Art.832.
-
CertificationofIicheque.
(1)Notwithstandinganyp.rovisiontothecontrary,a
ofwhiohcoverisavailabletothedrawermaybe
draweeifthedrawersorequests.
(2)Thecoverinrespectofacertifiedchequeshallremainblockedina
separateaccountforthebenefitoftheholderuntiltheexpiryofthe
periodoftimeforpresentmentprovidedin.Ar:t.855.
(3)Cel'tificationiseffectedbythesignatureofthedraweeontheface
ofthecheque.
chequeinrespect
certifiedbythe
Art.833.
-
Designationofpayee.
(1)Achequemaybemadepayableto;
(a)aspecifiedpersonwithorwithouttheexpressclause"to
order";or
(b)aspecifiedpersonwithaclause"nottoorder"oranysimilar
clause;or
(c)bearer.
(2)Achequemadep.ayabletoaspecifiedpersonwiththewords"orto
bearer"oranysimilarwordsshallbedeemedtobeachequetobearer.

196. COMMERCIAL CODE 183
(3)AchequcwhichdocsnotspecifydlCpayecshallbedeem€dtobe
ach€quetobea~r.
AI'\.834.
-
Chequetodrawer'sorderandchequedrawnonthedrawer.
(I)Achequemaybedrawntorhedrawer'sownorder.
(2)Aohequemaybedrawnforaccountofavhirdperson.
(3)Achequedrawnbyabankeronhimselfmaynotbetobearer.
Al't.835.-Provisionforinterest.
Achequemaybepayableatthedomicileofathirdpartyinthelocality
wherethedraweehashisdomicileorinanotherlocalityprovidedtihot
suchthirdpal'tyisabanker.
Art.837.
-
Discrepancyinthesumpayable.
(I)Wheretheamountofaohequeisexpressedbothinwordsandfigures
andthereisadiscrepancy,theamountexpressedinwordsshallbe
paid.
(2)Wheretheamountofachequeisexpressedmore~hanonceinwords
ormorethanonceinfiguresandthereisadiscrepancy,thesmaller
sumshallbepaid.
Art.838.
-
Signatureofpersonsincapableofbindingthemselves.
Whereachequebears,signaturesofpersonsincapableofhil.dingthem-
selvesbyacheque,forgedsignaturesorsignaturesoffictiousper-
sons,whosignedthechequeoronwhosebehaHitwassigned,theobliga-
tionsoftheotherpersonswhohavesigneditshallhevalid.
Art.839.
-
Signaturewithoutpowertoact.
Whosoeversignsadhequeonbehalfofapersonforwhomhehasnopower
toactshallbindhimselfasapartytothechequeand,ifhepays,shall
havethesamerightsasthepersonforwhomhepurportedtoact.The
sameruleshallapplytoanagentwhohasexceededbispowers.
Art.840.
-
Responsibilityoft.hedrawer.
Thedrawerguaranteespayment.Anyprovisionbywhiclh,thedrawer
releaseshimselffromhisguaranteeshallbeofnoeffect.
Art.841.
-
Cheq.ueincompleteatissue.
Ifaohequewh,ichwasincompletewhenissuedhasbeencompletedother-
wisethaninaccordancewitihvheagreementsenteredinto,thenon-obser-

197. 184 COMMERCIAL CODE
vanceofsuchagreementsmaynotbesetupagainsttheholderunlesshe
hasacquiredtheclIequeinbadfaithor,inacquiringit,tiehascommitted
afault.
Section2.Neg;otiation
Art.842.-Negotiability.
(1)AclIequeIIIIIIldepayabletoaspecifiedperson,withorwithoutthe
expressclause"toorder,"maybetransferredbymeansofendor-
sement.
(2)Achequemadepayabletoaspecifiedpetsoninwhichthewords
"nottoorder"oranysimilarwordshavebeeninserted,canonlyhe
transferredaccordingtotheformandwiththeeffectsofanordinary
assignment.
(3)AclIequemaybeendorsedeventothedrawerortoanyperson
liableunderthecheque,whomayre-endorsethedlreque.
Art.843.
-
Elementsofendorsement.
(1)Anendorsementshallbeunoonditional.Anyconditiontowhichit
ismadesubjectshallbeofnoeffect.
(2)Apartialendorsementoranendonementbythedraiweeshallbe
nullandvoid.
(3)Anendorsement"tobearer"shallamounttoanendorsementinblank..
(4)Anendorsementtothedraweehastlheeffectofareceipt,unlessthe
draweehasseveralestablishmentsandtheendorsementismadein
favourofanestablishmentotherthanonwhichthecihequehasbeen
drawn.
Art.844.
-
Forms.
(1)Anendorsementshallbewrittenonthechequeoronaslipaffixed
thereto(allonge).Itshallbesignedbytheendorser.
(2)Theendorsementmayleavethebeneficiaryunspecifiedormayconsist
simplyofthesignatureof,theendorser(endorsementinblank).In
thelattercasetheendorsementtobevalidshallbewrittenonthe
back.ofthechequeoron1!heslipattachedthereto(allonge).
Art.845.-Effects.
(1)Anendorsementshalltransferalltherightsarisingoutofachequ«1
inparticulartherightsinrespectofcoverassetforthinArt.801.
(2)Wheretheendorsementisinblank,theholdermay:
(a)filluptiheblank.eitherwithhisownnameorwiththename
ofSOlDJeotherperson;or

198. COMMERCIAL CODE 185
(b)re-clldol'bCthechequeinblankortosomeotherpe1"!IOD.;or
(c)transferthechequetothirdparTy!Wi.thoutfillinguptheblank
and,withoutendorsingit.
Art.846.
-
Guarantee.
(1)Unlessotherwiseexpressly~rovided,theendorserguaranteespay-
ment.
(2)Hemayprohibitanyfurvherendorsement;inthiscasehegivesno
guaranteetothepersonstoWlhomtheclhequeissubsequentlyendor!led.
Art.847.-Establishmentoftitlebytheholder.
Thepossessorofanendorsablechequeshallbedeemedtobethelawful
holderifheestablishes,histitletothechequethroughanuDint~pted
seriesofendorsements,eveniftJhelaetendorsementisinblank.Cancelled
endorsementsshaHbedisregarded.Whereanendorsementinblankill
followedbyanotherendorsementthepersonwhosignedthislastendor-
sementshal,lbedeemedtohaveacquiredthechequeby1!heen~ment
inbJank.
Art.848.-Chequetobearer.
Anendorsementonachequetobearershallrendertheend01'$er1ieb1e
inaccordancewiththeprovisionsl'eBardingtherightofrecoursebut
thallnotconverttlheinstrumentintoachequetoorder.
Art.849.
-
Dispossession.
Whereapersonhas,inanymannerwJ.tsoever,"dUpo8edof.
Clheque(whetheritisachequetobeal'8J'oraneudan8hlecheque!(t.
whichtheholderestablisheshisrightinthemannermentionedinAm.
847),theholderintowthosepossessiontiheabeque...come8bdlnot
surrenderthechequeunlesshehasaeqoireditinbedfaithor11Dlesein
acquiringithehascommittedafault.
Art.850.
-
Defences.
Personssuedonachequecannotsetepagainettirehold«delenoee'.found-
edontheirpersonalrelationswiththedrawerorwithpnwioulbolder,
unlesstheholderinacquiringtheciIequebaaknowiDglyactedtothe
detrimentofthedebtor.
Art.851.
-
Endorsementbyattorney.
(1)WihereanendorsementcontainslIhewords"valueincollection,"
"forcollection,""byattorney"oranyother8imil8trwGldaimpIyiDs

199. 186 COMMERCIAL CODE
agency
ttheholdermayexerciseallrightsariBingoutofthccheque,
buthccanendorseitonlyinhiscapacityasagent.
(2)In1Ihiscasethepartiesliablecanonlysetupagainsttheholder
defenceswlhichcouldbesetupagainsttheendorser.
(3)Theagencygrantedbypowerofattorneyshallnotterminateby
reasonofthedeathof,theprincipalorhisbecomingincapable.
Art.852.-Endorsementaftermaturityorafterprotest.
(1)Anendorsementa£terprotestorafteranequivalentdeclarationor
a£tertheexpirationofthelimitoftimeforpresentmentshallhave
theeffectofanordinaryassignment.
(2)Unlessthecontraryiswoved,anundatedendorsementi.sdeemedto
havebeenplacedonthechequepriortotheprotestorequivalentdec-
larationorprior,to~heexpirationofthelimitoftimereferredtoin
su.b-art.(1).
Section3.AcceptanceforHonour(Aval)
Art.853.-Generalprovisionsapplicable.
TheprovsionsofArt.766-768ofthisCoderelatingtoacceptanceforhon-
oursba1lapplytocheques.
Section4.Presenbnentandpayment
Art.854.-Maturity.
AchequeisMfableSIteight.
Art.855.-Presentmentforpayment.
Achequeshallbepresentedforpaymentwithi.nsixmonthsofthedate
thereof,regardlessofwihllmthechequewasissued.
Art.856.
-
Differenceincalend4rs.
Whereachequeisdrawninoneplaceandispayaibleinanotherhavinga
differentcalendar,thedayofissueshaUbeconstruedasbeingtheequiv-
alentdayof,I!hiecalendaroftheplaceofpayment.
Art.857.-Stoppingpaymentofc.heq,ue.
Thestoppingofthepaymentofadhequebythedrawerissufficientautho-
rityforabanktorefusepayment.
Art.858.
-
Deathofdrawerafterissueofacheque.
Neitherthedeathofthedrawernormsincapacitytakingplaceaftertlheis-
Bueofthechequeshiallihaveanyeffectasregardstihecheque.

200. COMMERCIAL CODE
187
Art.859.
-
Receipts.Partialpayment.
(1)Thedraweewhopaysachequemayl"c(!uirethatitbegiventohim
receiptedbytheholder.
(2)Theholdermaynotrefusepartialpayment.
(3)Where~hecoverislessthantheamountofthecheque,theholder
mayrequirepaymentuptotheamountofthecover.
(4)Incaseofpurtialpayment,thedraweemayrequirethatthep.artial
paymentbementionedonthechequeandarecieptgiventohim.
(5)Partialpaymentsontheamountofachequeshalldischarge~hedraw.
erandendorsers.
(6)Theholdershallprotestthechequefortheremainder.
Art.860.
-
Verificationofendorsements.
Thedrawee\1110paysanendorsablechequeslhallnotbehoundtoverify
thesignatureoftheendorsersandshallonlyverifythesignatureofthe
drawerandofthelastendorsee.
Art.861.-Dischargeofthedrawee.
Adraweewehointheabsenceofobjectionpayachequeingoodfaithand
inaccordancewi~hnormalbusinesspraticeshallbedeemedtobevalidly
discharged.
Art.862.
-
Paymentinaforeignc.urrency.
(1)Whereachequeisdrawnpa'yableinacurrencywhichisnotthatof
theplaceofpayment,thesumpay~lemay,withintlhelimitoftime
forthepresentmentofthecheque,bepaidintlhecurrencyofthe
placeQfpaymentaccordingtoitsvalueonthedateofpayment.
Wherepaymenthasnotbeenmadeonpresentment,theholdermay
demandthatpaymentoftheamountofthechequeinthecurrencyof
bheplaceofpaymentbemadeaccordingtotherateonthedayof
presentmentordayofpayment.
(2)Thedrawermayprovidethatthesumpayableshallbecalculatedac.
cordingtoarateexpressedinthecheque.
(3)Theprovisionsofsub-art.(I)and(2)shallnotapply,Wlherethe
drawerrhasprovidedthatpaymentshallhemadeinaspecifiedcur-
rency(stipulationforeffectivepaymentinaforeigncurrency).
(4)Wheretheamountofthechequeisspecifiedinacurrencyhaving
thesamedenominationbutadifferentvalueinthecountryofissue
andthecountryofp.ayment,referenceshallhedeemedtobemadeto
thecurrencyoftheplaceofpayment.

201. 188
COMMERCIAL CODE
Section5.Crossedchequesandchequespayableinaccount
Art.863.-CrossedcheqlW.Definition.
(1)Thedrawerorholderofachequemaycrossittocausetheeffectsset
outinArt.864.
(2)Acrossingiseffectedbyt\voparaHellinesdrawnonthefaceofthe
cheque.Thecrossingmaybegcncralorspecial.
(3)Thecrossingisgeneralifitconsistsofthetwolinesonlyorifbet.
weenthelinestheterm"banker"orsomeequivalenttermisinserted;
itisspecialifthenameofabankeriswrittenbetweenthelines.
(4)Ageneralcrossing~aybeconvertedintoaspecialcrossing,buta
specialcrossingmaynotbeconvertedintoageneralcrossing.
(5)Theobliterationei~herofacrossingorofthenameofthebanker
shallberegardedasnothavingtakenplace.
Art.864.-Effects.
(1)Achequewhichiscrossedgene!rallyoonbepaidbythedraweeonly
toabankerortoacustomerofthedra'wee.
(2)Achequewhidhisorossedspeciallycanbepaidby,thedraweronlyto
tihenamedbankeror,wheret'helatteristhedrawee,toacustomerof
thedrawee.T,henamedbankermayhavethechequecollectedbyan-
otherbanker.
(3)Abankermaynotacquirea,crosseddlu~queexcep,tfromoneofhis
customersorfromanotherbanker.Hemaynotcollectitfortheac-
countofot~rpersonsthant1heforegoing.
(4)Achequebearingcontradiotoryorirreconciliablespecialcrossingmay
notbepaid.
Art.865.
-
Crossedchequebeari.ngthewords"notnegotiable."
(1)Acrossedchequemaybearthewords"notnegotiable."
(2)Whereapersontakesacl'08lledchequewhichbearsonitthewords
"notne~tiable"heshallnothaveandshallnotbecapableofgiving
abetter.titletothechequethanthatwhidhthepersonfromwhomhe
tookithad.
Art.866.-Liabilityofthiebanker.
(1)AbankerwhodoesnotcomplywiththeprovisionsofArticles864
and865shallbeliablefortheresultingdamageuptotheamountof
thecheque.

202. COMMERCIAL CODE 189
(2)Whereabankerpaysaohequeingoodfaithandwi,thoutnegligence
!heshallnotbeliablewherethecrossinghasbeenaltered,struckout
ormodifiedcontrarytolaw.Heshallbedeemedtohavelmidepay-
menttothetrueownerofthecheque.
(3)Abankerwhoreceivespaymentofacrossedchequeforacustomer's
accountinagoodfaithandwithoutneg-1igenceshallnotbeliable
whereitisghownthatthecustomerhasnorighttothein!!trumentor
thathisrightissubjecttoadisability.
(4)'I1hecreditinginadvanceofacustomer'saccountwiththeamountof
acrossedohcqueshallnotdeprivethebankerfromenjoyingthepro.
visionsofthisAmcle.
Art.867.-Chequepayableinaccount.
(1)'!1h,edrawerortheholderofaohequemayprohibititspaymentin
cashbywritingtransversallyacross1Jhefaeeofthechequethewords
"payableinaccount"oranysimilarwords.
(2)Insuohacasetheohequecanonlybesettledbythedraweebymeans
ofbook-entry(creditinaccount,transferfromoneaccounttoanoth-
er,setofforclearing-housesettlement).Settlementbybook-entryshall
amounttopayment.
(3)'I1lredeletionofthewords"payableinaccount"!!hallbeofnoeffect.
(4)Thedraweewlhodoesnotobservetheforegoingprovisionsshallbeli-
ableforresultingdamageasprovidedinArt.866.
Section6.Recoursefornon-payment
Art.868.
-
Rig.htsoftheholder.
Theholdermayexercise,hisrightofrecourseagainsttheendorsers,the
drawerand1Jheotherpartiesliablewheretlhechequeonp,resentmentin
duetimeisnotpaidandtherefusaltopayisevidenced:
(a)byaformalinstrument(protest);or
(b)byadeclm-ationbythedraweedatedandwrittenonthecheque
andspecifyingthedayofpresentment;or
(c)byadateddeclarationmadebyafinancialinstitutionapproved
bytheGovernmentstatingthat<thechequehasbeenprerentedin
duetimeand!hasnotbeenpaid.
Art.869.
-
Protest.Periodsoftime.
(1)Theprotestorequivalentdeclarationshallhemadebeforet~llCexpira-
tionofthelimitoftimeforpresentment.

203. 190 COMMERCIAL CODE
(2)Wherethechequeispresentedonthelastdayofthelimitof,time,
theprotestmaybedrawnuportheequivalentdec1arationmadcon
thefirstwurImngdayfollowing.
Art.870.-Notice.
(1)'TIheiholdershallgivenotiet)ofnon-paymeruttohisendorserandto
thed;rowerwithinthefourworkingdaysfollowingthedayonwhich
1IheprotestisdraWlnuportheequivalentdeclarationismadeor,in
thecaseofaprovision"retoursansLmis,"thedayofpresentment.
(2)ThepublicofficerwlhoIhasdra,wnuptheprotestshallinforminwrit-
tingwithoutdelaythepel'sonsboundbythechequewhoseaddresses
are&peoifiedonthechequeorknowntothepublicofficerdrawingup
theprotest,orspecifiedbythepersons.havingdemandedtheprotest.
'I1hieexpensesarisingoutofsuchnoticeshaHbeaddedtorth.ecostsof
1Iheprotest.
(3)Everyendorsershall,withinthetwowOil'kingdaysfollowingtheday
onwhiChhe;receives,informmsendorserofthenoticewhichhehas
received,mentioningtJlrenamesandaddressesofthosewhohavegiven
1!hepreviousnoticesandsoonthroughtheseriesuntilthedraweris
,reached.'TIhepel1iodsmentionedaboveshallil"Unfromtihereceiptof
thepreceedingnotice.
(4)WhereinlIOOO,rdancewithrtiheprovisionsofsub-art.(3)noticeisgiv.
entoapersonw1hohassignedacheque,thesamenoticeShallbegiv-
en,witihinrtIhesamelimitoftimetoMsacceptorforhonour.
(5)W,IJereanend<m.erhasnotspecifiedhisaddressorhas8pecifieditin
,1millegiblemanner,itissufficientifnoticeisgiventotheendorser
precedinghim.
(6)Theperson'W\hoisrequiredto.givenoticemaygiveitinanyform
wbaitsoever,evenbysimply;retUirning,thecheque.
(7)Heshallshowthat\hehasgiven1I10ticewithilIlthelimitoftimepre.
8Crihed.Tmstime-limitmallberegardedasihavingbeenobservedrifa
lettergivingtihenoticehasbeenpostedwithinrthesaidtime.
(8)Apersonwhodoesnotgivenoticewiltthint!helimitoftimeprescribed
abovedoesnotforfeithis~ts.Heshallbeliableforthedamage,if
any,causedbyhisnegligence,buttheamountofhisliabilitymallnot
exceedtiheamourutoftheciheqe.
Art.871.-'Provision"sansprotet."
(1)Thedrawer,anendorseroranacceptorforhonourmay,bythewords
"retour53nsfmis,""88IIlSproret"Oil'anyothersimilairwordswritten

204. COMMERCIAL CODE 191
ontheinstrumen,tandsigned,releasethe,holderfromhavingaprotest
drawnupOranequiv,alentdeclarationmadeinordertoexercisehis
rightofrecourse.
(2)Thesewordsshallnotreleasetheholderfrompresentingthecheque
within~heprescribedlimitoftimeorfromgivingtherequisite
wordswrittenbythedrawer,theholedrhastheprotestdrawnupor
equivalentdeclarationmade,heshallbeartheeXlpensesthereof.
(3)Wherethesewordsarewrittenbythedrawer,theyshallbeeffective
againstallpersonsWlhohavesignedthecheque;wheretheyarewrit-
tenbya,nendorseroracceptorforhonour,theysh~llbeeffective
againstsuchendorseroracceptorforhonour.Whereinspi,teofthe
wordwrittenbythedrawer,theholderhastheprotestdrawnupor
equivalentdeclarationmade,heshallbeartheexpensesthereof.'
(4)Wherethe'Wordsarewrittenhyanendorseroracce~torforhonour,
thecostsoftheprotestorequivalentdeclarationmayberecovered
fromallthepersons,whohavesignedthecheque.
Art.872.
-
Jointguaranteeofpersonsboundbycheq,'.le.
(1)All,~hepersonsliableonachequeshallbejointly,andseverallylia-
abletotheihlOlder.
(2)TheholdermaysueallthesepersonsindividaullyorcollectiveIywith.
outbeingcompelledtoobservetheorderinwhichtheyhavebecome
bound.
(3)Anypetsonsigning<thedhequewhohastakenitupandpaidithas
thesameright.
(4)Proceedingsagainstoneofthepartiesliableshallbenobar
ceedingsagainsttheothers,notwithstandingthatsuohother
maybesubsequenttotheparty£irstproceededagainst.
Al1t.873.-Extentoftherightofrec;ourse.
Theholdermayclaimfrom,thepartyagainstwhomheexerciseshisright
ofrecourse:
(a)theunpaidamountofIJIhecheque;
(b)interestat~helegalrateasfrom~hedaiteofpresentment;
(c)theexpensesoftheRrotestorequivalentdeclaration,andofthenoti-
cesgivenandanyotherexpenses;
(d)acommissionnotexceedingonethirdperOO11t.
topro-
parties
Art.874.
-
Extentoftherightofrecourseofapartywhotakesupandpays.
Apal'Lywhotakesupandpaysachequecnnrecoverfromtlhepartiesliable
tohim:

205. ,192 COMMERCIAL CODE
(a)theentiresumwUiohbehaspaid;
(b)interestanthesaidsumcalculatedatthelegalrate,asfromthe
dayanWIhWhibemadepayment;
(c)anyexpensesIWihidhhehasincurred;
(d)aCOIIlDIi8IIicmnotexceedingtwo.permille.
Art.875.
-
Righttosurrenderofcheque,protestandreceiptacco.unt.
(1)Everypartyliableagainstwhomarightofrecou,rseisormaybeex-
ercisedmayrequireagainstplII}'iJDenttlbiatthedhequebesurrendered
tohimwitlhiIheprotestorequivalentdeclarationandiareceipt.
(2)Everyendorserwiho.hastakenupandpaidadhequem~cancelhis
ownendorsementamdtho.seo.fsubsequenrtendo.rsers.
Art.876.
-
Forcemajeure.
(1)Wiherethepresentmento.ftlhechequeo.rthedraWlingupofthepro.test
o.r<themarkingo.ftheeqUlivalentdeclaratio.nw:ilihinthewescribedli.
mitso.ftimeisabsolutelypreventedbyforcemajeure(legalprohibi.
tio.nbyanyStateorothercasesofforcemajeure),theselimitso.ftime
8W1beextended.
(2)'I1heholdershiallgiveno.ticewitho.utdelayo.fthecaseo.ffarcemaje-
ureto.hisendo~andmakeadatedandsigneddec1araliicmofthis
no.tice,an<theohequeoranaslipaffixedthereto(allonge);ino<ther
reepects,theprovisio.nsofArt.870shallapply.
(3)Whereforcemajeurehasterminatedtheho.ldershallwithamdelay
preeenttheohequeforpaymentand,wherenecessary,haveaprotest
drawnuporanequivalentdeclaratio.nmade.
(4)Where.forcemajeurecontinuesto.operatebeyo.ndfifteendaysafterthe
dateanwhichtheholder,evenbefo.re.theexpirationo.fthetimeli-
mitfarpreeenrtment,hasgivenno.ticeo.fforcemajeuretohisendOl'Ser,
recoursemaybeexercisedamdneitiher.presentmentno.rapro.testno.r
anequiV'8llenrtdeclarationshallbenecessal1)'.
(5)Factswjhioharepurelypersonalto.,theho.ldero.rto.thepersonen-
trustedwiththepresentmento.f,tthedhequeo.rthedrawingupo.fthe
protesto.rtheID1I8Icingo.fanequivalentdeclarationshallnotbedeem-
edto.const~tutecaseso.fforcemajeure.
Section7.PartsofaSet
Art.877.-Righttoseveralparts.
Withtheexceptionofbearercheques,anychequeiSiSUedino.necountry
andpayableinano.ther,o.rissuedandpayableinthesamecountry,maybe

206. COMMERCIAL CODE 193
drawninasetofidenticalpart.Whereachequeisinasetofparts,eachpart
shallbenumberedinthebodyoftheinstrument,oreaohpartshallbe
deemedtobeaseparateoheque.
Art.873.-Relationbetweenpartsofaset.
(I)Paymentmadeononepartoperatesasadischarge,notwithstanding
~hatthereisnoprovisionthatsuchpaymentshallrendertheother
partsofnoeffeot.
(2)Anendorserwhohasnegotiatedpartsofdifferentpersonsandtheen-
dorserssubsequenttohimshallbeliableonallthepartsbeari.ngtheir
signatures,whiohhavenotbeensurrendered.
Section8.Alterations
Art.879.-Extentoftheobligationsofsignatories.
Incaseofalterrationoft!hetextofacheque,partieswhohavesignedsub-
sequenttothealterationshallbeboundaccordingtothetermsofthealter-
edtext;partieswhohavesignedbeforethealterationshallbebound>ac.
cordingtothetermsoftheoriginaltext:.
Art.880.
-
Alterationofcrossedcheque.
(I)Inthecaseofacrossedoheque,anyalterationofthecrossingmade
withoutaut1l1Orisationshallinvalidatethechequeexceptasregards
anypersonwhohashimselfmadeorconsentedtothealteration,and
towardslaterendorsers.
(2)Wherethealterationisnotapparent,thelawfulIholdermayrelyon
thechequeasifithadnotbeenalteredandrequirepaymentasorigin-
al1yprovided.
Section9.Limitationofactions
Art.881.
-
Periodsoftime.
(I)Actionsofrecoursebytheholderagainsttheendorsers,thedrawer
andtheotherpartiesliableshallbebarredaftersixmonthsfromthe
expirationofthelimitoftimeforpresentment.
(2)Actionsofrecoursebythedifferentpartiesliableforthepaymentof
achequeagainstotlh~rsuchpartiesshallbebarredaftersixmonths
fromthedayon,whicJhthepartyliablehaspaidthechequeortheday
onwhichhewassued1fIrereon.
(3)Ae!ionsbytheholderofthechequeagainstUledraweeshallbebarred
afterthreeyearsfromtheexpiryofthetimelimitforpresentment.
14*

207. 196 COMMERCIAL CODE
(4)Limitationsba11run,inthecaseonegalproceedings,fromthedateof
1Jheconclusionof1ih.elastproceedings.
(5)Limitaliionshannotapplywherejudgementhasbeenpronouncedor
thedebthasbeenacknowledgedbyseparateact.
Art.882.
-
Interruption.
(1)Thepe11iodoftimitati()nshallheinterruptedhyhringingofanaotion,
bynoticebeinggivenof~hirdpartyactionorbylodgingaclaimin
bankruptcy.
(2)1nt.erruptionoftheperiodoflimitationSlmllbeeffectiveagainstthe
personinrespectofwhomtheactinterruptingsuchperiodwasper.
formed.
(3)Where1lheperiodoffunitationisinterrupted,afurtherperiodofthe
lIBDledurationshallbegintorun.
Section10.GeneralProvisions
Art.883.-Timelimits.Holidays.
(1)'I1hiepresentmentorprotestofachequemayonlytakeplaceona
workingday.
(2)Wherethelastdayofthelimitoftimeprescribedbylawforpedorm.
inganyactrelatingtoacheque,andpartioularlyforpresentmentor
forthedrawingupofaprotestofthemaIcingofanequivalentdecla.
ration,isapublicholiday,thelimitoftimeshiaJlheextendedUl1Itilthe
firstrworkingdaywhiChfollowstheexpi!l'a,tionofthattime.Holid8iyS
wibidhooourduring1Iheperiodshallheincludedincalculamnglimits
oftime.
(3)Daysonwhioh,undertheprovisionsofthelawsinforce,nopaymenJt
canherequirednoranyprotestdrawnup.,shallbedeemedtobepub.
licholidays.
Art.884.-Calcukltionoftimelimits.
LegalorcontractuallimitsoftimeshaHnotincludethedayonwhiohthe
periodheginstorun.
Art.885.
-
Prohibitionofd4ysofgrace.
Nodayofgracemaybegranted..
Art.886.
-
Referencetoprovisionsrekltingtobillsofexchange.
Thefollow1i.ngpl"OVlisionsrelatingtobillsofeX!\JhangeappJytodheques
jDsofarastheyarenotinconsistentrwiththeprovisionsofthisChapter:
Allt.781.785and788(protest),Art.798(sequestration),Art.799(pro.

208. (JOMMERCIAL 'CoBB
195
ceedingsforunlatwfulemidhment),Art.800(reservation'ofc:ia8uaI:(Jroce-
edmgs)andArt.801(cover).
Chapter5.TravellersCheques
Art.887.
-
Definition.
(1)Atravellerschequeisadocumenthandedbyabankert&hk'cWmt
underwhichanamountspecifiedintIhedocumentilipayable'tothe
payeeeitheratabranchof1ihebank.issuingtIhedocument'oratany
otherbankinco~dence.
(2)RegulationsmaydetenninetJh~banksauthorisedtoissue:travelIms
cheques.
Art.888.
-
Particulars.
NotravellersohequeshallbevalidunlessitOOllf.ali.nstihiefollo.w.ingpl¥'ti.
culars:
(1)thewords"travellerscheque;"
(2)thenameandsignatureofthebamkerissuingthecheque;
(3)thenameof1Jhepayee;
(4)thepromisetopayaspecifiedam.(JI1Dt;
(5)thewords"toorder"or"notnegotiable;"
(6)theplaceanddateofissue;
.
(7)theperiodduringwhichthechequeshallbevalid;'provided'tJbdtsuch
periodshallnotexceedoneyear.
Art.889.
-
Placeandconditionsofpayment.
(1)T1heplacewheretJhrechequewillbepaidmaybespeoifiedintae
chequeorinanyotherdocumenthandedtothepa,.,.,.
(2)Theconditionsonwhichthepayeemaydemandpaymentmaybe
specifiedinthechequeorinalliY01lherdocumenthandedtotIIre~.
Art.890.
-
Provisionsregardingchequesnotapplicable.
(1)Theprovisionsrelatingtocltequesshallnotapplytotravellere
Cheques.
(2)Nothinginsub-art.(1)slmJlaffect1!heprovisionsoftdrePenalCode
relatingtofalseorfalsifieddhieques.
Chapter6.Publicityofprotest
Art.891.-Dutytosendlistofprotests.
Publicofficialsentitledtodrawupprotestsinrespectofaegot:idle
instrumentsshalleverymonthsupplyilJheregistrwof.dIecourtwithin

209. 196 COMMERCIAL CODE
whosejurisdictiontllheyactwitlhalistofallprotestsdrawnupduringthe
precedingmonthinrespectofbillsofexchangeacceptedandnotpaid,
andunpaidwomissorynotesorcheques.
Art.892.-Dutiesofregistrar.
TheregistrarshaHkeepuptodateanominal:ralJforeverydebtor
shoiwing:
(1)thedateoftheprotest;
(2)1Jhename,professionanddomicileoftIDepayeeordrawer;
(3)tihenameorfirm-nmne,professionanddomicileofthemakerofa
promissorynote,ordrawerofachequeoracceptorofabillof
exohange;
(4)thedateofmaturity,ifany;
(5)thevalueoftheinstrument;
(6)Iheresultoftheprotest.
Art.893.-Copies.
AfteronemonthandwitJ»nIIW\1yearsfromtheprotest,all!ypersonInalY
athis0WtIlexpense:requirethe,registrar,todelivertohlimacopyof,the
rollWOvidedin~:teprecedingAmide.
Art.394.
-
Cancellation.
(1)Wherethedebtordepositsagain;;treceipttheinstrumentorthe
protestorareceipt!loowingpaymentofaoheque,theregistrarshall,
atthedebtor's~, strikeoft'tihenoticeofprotestenteredlin
thenominalrollconcerningthatdebtor.
(2)Theregistrar'sliabilitym:respectofdocumentsdepositedshallcea;;e
aftertibreeyea,rsfromttbeprotest.
Art.895.-Publicationnotpermitted
Publicationinanyformoflistsandrollspreparedinaccordancewith
theprovisionsof1ImsOhiapterisproIhiibitedunderpainofdamages.
TITLEm.BANKINGTRANSACTIONS
Chapter1.BankDeposits
Section1.Depositoffunds
Art.896.-Natureofthecontract.
Thecontractofdepositoffundsrendersthebankownerofthefunds
deposited,irrespectiveofthemodeofdeposit.'l1hehankma~disposeof
thesefunwinrespectofitsprofessionalactivity,subjecttotheirrepay-
mentundertheconditionsprovidedintJhecontract:

210. COMMERCIAL CODE 197
Providedthatthebank!lhallnotacquiretIhetitletonor.1Ihe.tto
disposeofcoinsorotIherindividualmonetarytokensin:respectofwhich
thereisaprovisionthattheyshallberefundedinkind.
Art.897.
-
Depositaccount.
(I)Thecontractofdepositoffundsresultsinthcopeningofanaccount
inwhichthebankentersbywayofcreditanddeMtaUtransactions
caIlriedoutwilihtihedepositor,oronIbisbehalfwiththi:rdparties.
(2)TransactionswhidbtheplUlticshaveagreedtoexcludeshallnotbe
enteredintheaccount.
Art.898.-Formsofdeposit.
(1)Unlessotherwiseagreed,adepoSiitofftmdsshaIilbeatsightand1Ihe
IholderoftheaccountmaydisposeatanytimeoftheWlholeorpa!'t
ofthebalance.
.
(2)'!:he.tofdisposalasdefinedinsu&art.(1)maybemadesubject
tonoticeortheexpiJryofafixedperiod.
Art.899.
-
Nooverdrafts.
Acontractofdepositoffundsshallasof:N.ghtgivenorighttoanover.
draft.
Art.900.-Statementsofaccount.
AcopyoftheaccountshallbesenttothedepoSlitoronceeachyearormore
frequently,wherecustomaryoragreed,showingthebalancetobecarried
forward.
Art.901.-Placeoftransactions.
Unlessotherwise~, depositsanddrawingsshallbeeffectedattheoffice
of1IhebanklWIhere.theaccountwasopened.
Art.902.-Severalaccounts.
WlheremorethanoneaccounthasbeenopenedbytheSIIIDleperson,ata
bankorseveI'mbranchesof1IheliIaDlebank,eachaICOOtmtsha1l,unlessother-
wiseagreed,opemtesep¥,atelyf.romtheothers.
Section2.BankTransfers
Art.903.
-
Definition.
(1)Abanktransferisatransactionbywhidhabankdebitstheaccountof
adepolitor,uponhiswritteninstructions,andcreditsbyitsentryan.
otheraccountwiththeIllUDeamoUllit.

211. 198 COMMBBCIAL CODE
(2)Theconditionsoftheissueoftransferord.tmlshallbeasagreedbythe
parties.Trauferstobearershallnotbepel'IDlitted.
(3)Wherethebeneficiaryunder<thetransferisrequiredtocarrythesum
todiecreditofathirdparty,thenameofthethirdpartyshallappear
inthetNlnsferorder.
Art.904.-Typesoftransfer.
A'transfermaybeinternalorexternaldependingonwhetihertheaccount
tobedebitedandtheaccounttobecreditedhavebeenopenedatthesame
branchofthebankoratdiff~entbranches.
Art.905.
-
Sumsforwhichthetransferorderisgiven.
Atransferorderisvalideitherinrespectofsumsalreadyenteredinthe
accountofthepersonwhoorderstransferorinrespectofsumstobeenter-
edtherein,withinaperioddeterminedinadvanceinag;reementwiththe
bank.
Art.906.-Transferoftitle.Canr~Uationoftransferorder.
(1)Thebeneficiaryunderatransferobtainstitletothesumtobetrans-
fm-redathletimeWlhenthebankdebitstheaccountoftheperson
whoorderstransfer.
(2)Atransferordermaybecancelleduntilt/lmttime.
(3)TheissueofatraneferOt'derasprovidedinArt.907(1)involvesfinal
disolainteroftihe.tofcancellation.
Art.907.-Specialprovisions.
(1)Itmaybeprovidedthattl"ansferordersshallnotbenotifieddirecitly
tothebankbutmaybepresentedtoitbythebeneficiaryhimself.
(2)Itmaybeprovidedthatcertaintransfersshallnotbeenteredupon
receiptofthedirectordersofthepersonissuingtiheorderor,thepre-
sentationoftheinstrumentoftransfer,butonlyattiheendoftheday
togetherwithalltransferorderscomingwithinthesamecatego11Yre-
ceivedduringthatday.
Art.!908.-
Insufficientcover.
Wherethereisnotsufficientcover,thebankmayrefusetransfer.
Art.909.-Subsistenceofcausaldebt.
Thedebt'forthesettlementofwhiohatransferorderisissuedshallsubsist
togetherwith.allsecuritiesandcollateraluntiltheaccountofthebenefid-
aryiseffectivelycreditedwithtiheamountofthetransfer.

212. COMMERCIAL CODE 199
Art.910.
-
Oppositiontotransferorder.
ThepersonorderingtransfermayvalidlyopposetheexecutionofatranSfer
order,notwithstandingthatitbasbeenevidencedbyanin8trumeDtbanded
tothebeneficiary,fromthedateof8judgmentdeclariDgthe~
ofthebeneficiaryorgrantinghimthebenefitofaoompoDtionwith
creditors.
Art.911.
-
TransferorderspresentedbeforetJ7.edeclartrtionofthehank-
ruptcyofthepersonissuingtheorder.
AbankmayvalidLydebittheaccountofdteperIOniMuingtheorder
withalltransferspresentedbeforeajudgmentdeclari.nghisbankruptcy
orgrantinghimthebenefitofacompositionwithcreditors.
Section3.DepositofSecurities
Art.912.-Prohibitionofbankhandlingsecuritiesonitsownbehalf.
Unlessotherwiseagreedinwritingabankmayonlyhandleeecurities
andexercisetJhJeriglhtsrelatingtheretoexclusivelyonbehaJfoflIhe
depositor.
Art.913-DutytoprovideCl'/'stody.
(1)Abankshallensurethecustodyofthesecuritiesandactinrelation
theretowith,theduecarerequiredofapublicbaileeunderthecivil
law.
(2)Securitiesmayonlybesurrenderedunderatransactionrequiring
suobsurrender.
Art.914.-Collectionofyieldsofsecuritiesandcollateral~.
(1)UnlessotherwiseagreedabankshaDeoIleettheamountofint--.
dividends,capitalrepayments,8IDlOrti8etionandanyoIhereotid.
mentsarisingunderthesecuritiesdeposj,tedaslOOnalltheycan~
claimed.
(2)Sumscollectedshallbeplacedatthedispoeal01thedepoeitor.in
particularbyentrytothecreditofhisdepositaccount.
(3)AbankshallcollectfreescripissuesandjointIhemtothedepoait.
(40)ItshaHcanyouttransaoliionsforthesafe-keepingoftheri8I*
arisingoutofthesecurities,suchasregrouping.embange.renewal
ofcouponsheetsandstamping.

213. -
CoMMBRCIAL CODB
Art.915-Notificationtodepositor.
(1)Tnmsacti.0D8whichinvolvetheexerciseofanoptionbytheowner
ofthesecuritiesshallhenotifiedtothedepositorbyregisteredletter,
~COIItsbeingbornebyhim.
(2)Wherethedepositordoesnotgivehisinstructionsinduetime,the
bankshall.transact,onbehalfofthedepositor,therightswhichhe
hasnotexerciIed.
Art.916.-DUty'tore&titute.
(1)Abankaballrestoresecu,ritiesatanytime,uponthedemandofthe
depositor,andwillhintheperiodsoftimeprovidedin.theconditions
ofCUItodyandsubjecttoanyripotsofretentionwhichthebankmay
heentitled.~claim.
(2)Restitution8ballhemadeattheplacewherethedepositwasmade.
It8hallrelateto,thetitlesdeposited,unlessrestitutionofdifferent
tideshasbeenagreedbythepartiesorispermittedbyI8IW.
Art.917.-Personstowhom.teatitutionistobemade.
(1)RedItutionshallonlyhemadetothedepositororthosehaving
rightsfromhimorto,thepersonappointedbyhimorthem,even
W1herethesecU#tIiesindWate1!hattheyarethepropertyofthird
panics.
(2)Securitiesinaspecificname;registeredinthenamesofausufruc.
twIryaDdab8reownermaybevalidJiy!handedtothebareowner
uponprodUctionofproofofthedeathoftheusufructuary.
Art.9.18.-Claimsregardingsecurities.
Thebankshallinformthedepositorofanyclaim;regardingdeposited
securitieswhichhasheenmadeincourtandofwhichthebankhasnotice.
Chapter2.HiringofSafes
Art.919.-ObjectofconlrGCt.
'l11econtractofhireofasafehasasitsobjecttoplaceatthedisposalof
thehirerasafeorcompartmentofasafeforaspecifiedperiodoftime
on
.
payme~tofarent.
Axt.920.-ObligationsoftMbank.
(1)Thebankaballtakeallnecessarymeasurestoensuretheupkeepand
custodyof!l8fes.
(2)Intheeventofanypotentialrisk
.tothesecurityofthesafes,the
bankshalltakeallnecessarystepstoenablethehirerstoemptytheir

214. COMMERCIAL CODE 201
safesbeforetheriskmateriaIises,evenoutsideworkingdaysand
hoursofbusiness.Thebankisnotboundtogiveindividualnotices
to,thehirers.
Art.921.-Accesstosafes.Keys.
(1)Thebankshallonlypermitthehirerorhisagenttohaveaccess
toasafe.
(2)Thekeyofasafeshellremainthepropertyof!!hebank.
Art.922.-Obligationsofhirer.
Wherethehirerplacesinhissafeanything,whichisdangerousinitself,
thebankmayf~thwithcancelthecontractofhire.
Art.923.-Terminationforfailuretopayrent.
(1)Indefaultofpaymentoftherentforanysingle'term,thecontract
shallterminateasofrightonemonthafterthebankhassentnotice
byregisteredletterandtherenthasnotbeenpaid.Attheexpiry
ofthisperiodthebankshalltakepossessionoftheSafeaftercalling
uponthehirertobepresentatthesafeonadayandtimefixed.
(2)Whereaihirersocalledupondoesnotpresenthimselforrefusesto
giveuphissafeopenwithitscontentsremovedandtoreturnthe
keygivingthecombination,thesaidsafeshallbefo,rcedinthc
presenceofacourtofficialwhoshalldrawupadescriptivereport
whiohshallconstituteevidenceasregardsallinterestedparties.
Art.924.-ExecutionleviedonaIIO.fe.
Executionmaybeleviedonasafeinaccordancewiththeprovisionsof
theCivilProcedureCode.
Chapter3.Contracts'forcurrentaccounts
Section1.Definition,conditionsanddurationofcurrentaccounts
Art.925.-Definition.
(1)Acontractforacurrentaccountisacontraotwtherebynamedcor.
respondentsagreetoenterinanaccount,byreciprocalandsimul.
taneousremittances,debtsarisingoutoftransactiODSbetweenthem
andthus
'tosubstituteforindividualandsuccessivesettlementsof
thesetransactioDSasinglesettlementtobecarriedtothesolebalance
of,theaccountatitsclosure.
(2)Whereithasbeenagreedthattheremittaneesofonepartyshall
onlybeginwhentheremittancesoftheotherhaveterminated,or
whereanexaminationoftheaccountsoindicates,therulesgovern.
ingcurrentaccountsshallnotapply.

215. 202
COMMERCIAL CODE
Art.926.
-
Dcbt8brougl~tiutoaccount.
(1)Alldebtsarisingoutofthebusinessrelationsbetweenthecorrespon-
dentsandwhicharenotguaranteed.bysecuritybyoperationoflaw
orunderagreementarethesubjectofremittancesintocurrent
account,unlessit,hasbeenagreedthatcertainofthemshallbe
excludedbygeneralorparticularstipulations.
(2)Debtsguaranteedbysecurityunderagreement,accordedbyone.
correspondentorbyathirdparty,maybeenteredincurrentaccount
underaspecialandformalagreementbetweentheinterestedparties.
Art.927.
-
Debtsexpressedindifferentcurrenciesordealingwithnon-fungible
thlings.
(1)Wheregivendebtsdealeitherwithsumsofmoneyexpresesdindiffe-
rentcurrenciesorwithnon.fungiblethings,thecorrespondentsmay
enterthemincurrentaccountprovidedthat:
(a)theyentertheremittancesrelatingtheretoundersep8j1'ateheads
withinwhichfungibilityisrequired;and
(b)itisprovidedthatthecurrentaccountshallretainitsunity,despite
thematerialdivisionintosevel"lllheads.
(2)Inthiscase,allthebalancesunderthedifferentheadsmustbecapable
ofbemgconverted,inordertobem.erged80astotWowa801ebUaDce
atatimefixedbythecorrespondentsandinnocaselater1Ihanthe
closureof,thecurrentaccount.
Art.928.-Durationofcurrent.account.
(1)Acurrentaccountwhichhasbeenopenedwithoutspecifyingitsdura-
tionmaybecloseclatany:timeIi£acorrespondent80de&ires,eabject
tothetimelimitsfornoticeprovidedor,wherenotprovided,CU8toIDa1'y.
(2)AcurrentaccountwhichhasbeenopeMdforafixedperiodehallbe
closedattheexpiryofthetermorearlierbyagreementbetween1Ihe
correspondents.
(3)Acurrentaccountshanbeclosedinanyeventbythedeathofoneor
otherofthecorrespondents,orbyhisbecomiDglegallyincapableor
bankrupt.
Art.929.-Effectsofclosureofaccount.
Theclosureofacurrentaccountconvertsthestatementsattihedateof
closureiotoabalanceandthisbalanceisthereuponatcallunl-thecor-

216. f.
COMMERCIAL CODE 203
respondentshaveotherwiseagreedorcertaintransactionsgivingriseto
remittancesandnotcompletedareofsudhlnatureastomodifythebalance.
Section2.Effectsofcurrentaccounts
Art.930.-Disposalofthecreditbalanceinthebooks.
UnlessothelTWiseagreed,eithercorrespondentmayfreelydispose,atany
time,ofthecreditbalanceshowninhisfavour.
Art.931.-Extinctionorreduc;tionofdebt.
Whereadebtwhichhasbeenthesubjectofaremittancemtocunentaccount
ceasestoexistorisreducedbyreasonofanactarisingafterttheentryof
theremittancein<theaccount,<thecorrespondingitemintheaccountshall
bestruckoutorwrittendowntothesameextentandtheaccountaccording.
lyamended.
Art.932.-Carryforwardoftheproductofsecurity.
(1)UnlessoIIherwiseprovidedintheagreementmadeunderArt.926(2),
theproductofthesecurityoriginallyrelatingtoadebtenteredin
currentaccountshalljJecarriedf~ uptotheamountofthe
contingentbalanceoftheaccount,withoutregardtocJumgeswhich
mi~tarisein,thebooksuntilclosure.
(2)Suchcarry-forwardmayonlybesetupagainstllhiirdpartiesifithas
beenpublishedinaccordancewiththerulesofcivillawforthe
preservationo~thesaidsecurity.
Art.933.-Prohibitionofappropriationofoneitemtoanotoor.
Noitemin,acurrentaccountmaybeappropriatedtoanitemontheother
side.
Art.934.
-'
Ru1Jesregardingprescriptionandinterest.
(1)Debtsenteredincurrentaccountshiannotbesubjecttotherules
applyingtheretoinrespectofpresonptionandm1ere8t.
(2)'I1heprovisionsofcivillawshallapplytoprescrip1lionofthebalance
afterclosure.
(3)Remittancesshallbea,rinrerestat"1herateprovidedbythecorrespon'
dents,orin,theahlenceofsuchprovision,attheratefixedunderthe
CivilCode.
(4)UnlessotherwiseagreedanduntiJclosureoftheacoountthisinterest
shallitselfbearinterestfrom.theday-piitsremittmweintoaccount,
providedthat1!hcisremittanceshallbemadeinaccordancewiththe
inte,rvalsoftimefixedundertheCivilCode.
,-
I

217. 204 COMMERCIAL CODE
Art.935.-Differentratesofinterestoncreditanddebititems.
Whenevertherateofinterestproyidedinacurrentaccountisnotthesame
forcreditanddebititems,interestshallbeMm-gedatthetimeofeach
remittancebycalculllJt:i.ngtheinterestproducedfromthedateoftfheprevious
remittanceonthebalancefollowingsuobremittance,andbyaddingthis
interesttothathav,ingalreadyrunonthesameside,unotilBetoffagainst
interestontheothersideatthe,timeofremittanceofinterestintothe
account.
Art.936.-Securityestablishedduringsuspectedperiodmaynotbesetup
againsttheestate.
(1)Wibereoneofthecot;respondentsbecomesbankrupt,anysecurityunder
agreementonibispropertyestablishedduringtheperiodprovidedin
Art.1029ofthisCode,by-yofguaranteeofthecontingentdebit
balanceofthecurrentaccou.nt,may.notbeBetupagainsttheestate
insofar85,atthetimethesaidsecuritywasestablished,thecurrent
accountalreadyshowedtihatcorreepondent86
a.
debtor.
(2)Thissecuritymaybesetupagai:DSttheestateasregardsthesurplus,
ifany,ofthedebitbalanceoftheaccountonthedayofclosureover
thisdebitposition,subjecttotheprovisionsofht.1030ofthisCode,
ifapp1icab1e.
Art.937.-Sequestrationofcurrentaccount.
(1)Thesequestrationofaourrentaccountmaybeeffectedatanytime
onthecreditbalan.oe,in-coordaneewiththeprovisionsoftheCivil
ProcedureCode.
(2)Suchsequestrationsbal1notprejudicesuobriBhtsasthedebtor's
correspondentmayenjOy:wi1lhrespecttothiscreditunderanagree-
mentbywmchthedebtorbasreJlinquishedthefreedisposalatany
timeofthiscreditbalance.
Section3.Effectsofbankruptcyofremitterwherecommercial
instrumentsarediscountedandenteredincurrentaccount
Art.938.-ContratJ'Gmferofinstrumenll.
(1)WheretheyieldondiscountofoommerojaJinstruIwmts.!hasbeenentered
incurrentaccountandtheinstrumentsbaveDOtbeenpaidonpreeent.
ment,tbereceiverofllheinstrumeDtsmay,even~theremitteris
dec1arodbankrupt,contratnDIIfertJbeseinstrumeDts,tihatistosay
carrytothedebitoftheaocouot
-
sumequaltothenOOJiDal'amount
oftheinstirumeD1lstogetherwiththe006tsprovidedinAn.791.

218. COMMERCIAL CODB 205
(2)Inttheeventofthebankiruptcyofdieremitter,contmtransferisonly
permittedinrespectofirimumentsunpaidattheda~ofmaturity;
anyagreementtotheoonta'ary'shallhe~rded.
Am.939.-Disposalofcontratransferredinstruments.
('1'
Where,aftercontratransfer,thecur,rentaecountshowsacredit
balanceinfavouroftherenrltterwho~becomebankrupt,lIbe
receivershlllllrestorethecontratransfe;rredinstruments.
(2)Where,aftercontratransfer,tliecurrentacoou.ntshowsadebit
balancetotheremitterwhohasbecomebankru.pt,~receivermay
retaintheinstruments,il'lreSpectiveofthedateofmaturity.
(3)Thereceivermay,intlhecaseprovidedinsub-art.(2),'aooumulate
thesumscollectedhyhimfrompersonsjointlyandseverallyliable,
asaresultofhisexerciseofIIhe.tsandsecuritiesarising.outof
thecontmtransferredinstrvments,withthedividendinthebank.
ruptcycollectedbyhimfor,thebalanceowingtohisIIICOOtmtdrawu
upaftercontraItMnsfer,subjecthowevertotlheprovisionsofArt.940.
Am.940.-Extentofrightofreceiver.
(1)11hereceivermayinnocaeetakeasaresultoftheeccumulation
provMedmArt.939(3)atotalamount1VfJB.1IhantIhedebit
halanceofthecurrentaccountaftercontratransfer,hisri~ttoa
dividendinthebankruptcyoftheremitterbeingtherebyasofright
reduced.
(2)Where1\Ihesta.tusof,theaccountissuchthatonthedateofbank.
ruptcy1ibereisalreadyadehitbalancetotiheremitterbeforecontra
transferoftheinstruments,thereceivermaynottakebywayof
accumulllJtionatotalamountjgre81terthanthesumcontratransferred
togetherwiththedividendcaloula.tedonthedebitbalanceofthe
accountbeforecontratransfer,his.ttoadividendinlIhebank.
ruptcyoftheremitterbeingtherebyasofrightreduced.
Chapter4.Discount
Art.941.-Definition.
(1)Discountisanagreementwherebyabankerundertakestopayin
advancetotheholderthevalueofcommercialinstrumentsorother
negotiablesecuritiesihavingadefinitetimeofpayment,which,the
holderassignstothebankersubjecttorepaymentoftheirvalueif
notpaidby,thepersonprincipallyliable.
(2)Thistransactiongivesto,thebankertherighttochargeinterestand
furtheranendorsingorothercommission.

219. 206
COMMERCIAL CODE
(3)Aspeciala,grooIJ1entIJ1ayprovideforafixeddiscount.
Art.942.
-
Calmlationofinterestandcommission.
(1)Interestshallbecalculatedonthebasisofthetimeremaininguntil
IJ1aturityoftheinstruIJ1ents,orforashOl'lterperiodinthecaseof
so-calledpawningtransactionsorothersunderwhichthereisreiIJ1.
burseIJ1entbeforeIJ1aturitybythebeneficiaryunderthediscount.
(2)Co=issionshallbecalculatedonthebasisofthevalueofthe
instruments.
(3)AIJ1iniIJ1UDlamountofinterestandofoo=issionmaybefixed.
Art.943.-Dutiesofbeneficiary.
(1)ThebeneficiaryunderadiScountshallreimbursetothebankerthe
nominalvalueofunpaidinstrumentsorsecurities.
(2)Instrumentsacceptedfordiscountforapal'tialamountonlyshall
be,reimburseduptothatamount.
Art.944.
-
Rightsofbanker.
(1)Thebankermay,withregardtotheprincipaldebtorsunderan
instrument,thebeneficiaryunderthediscountandatherpersons
jointlyliable,exercisealltherightsarisingoutoftheinstruments
discountedbyhim.
(2)Thebankerhasinaddition,asregardsthebeneficiaryunderthe
discount,aseparterighttoreimbursementofsumsplacedat,the
disposalofthebeneficiary,togellhe,rwithinterestandcommission.
This~tmaybeexerciseduptotheamouIIII:oft1heunpaidinstru.
ments,irrespectiveofthereasonsfornon-payment,and,inthecase
ofacurrentaccountbetweentheparties,inaccordancewiththepro.
visionsofArt.938.940.
Chapter5.CreditTransactions
Section1.OpenCredits
Art.945.
-
Object.
(1)Anopencredithasasitsobjecttoplacedirectlyorindirectlyatthe
disposalofthebeneficiarymeansofpaymentuptoacertainsum
.
ofmoney.
(2)Anopencreditmaybegrantedforalimitedorunlimitedperiod.
Anunlimiltedcreditmaybecancelledatanytimebythebanker.
Art.946.-Cancellation.
AnOpl']1creditmaybc'cancelledbythedcathorincapacityofthe
heneficiaryorsuspensionofpayment,evenwherenotestablishedby

220. COMMERCIAL CODE 207
judgment,oronaccountofgrossnegligenceintheuseofthecredit
granted.
Section2.AdvancesonSecurities
Art.947.-Definition.
Anadvanceonsecuritiesisatransactionbywhichabanker
creditagainstsecuritiesbelongingtothebenefioiaryunder;the
toatlhiirdpartywhohasBg1I'eedto'thepledge.
Art.948.-Forms.
grantsa
credit
0'1'
(1)AnadvaneeO'nsecuritiesshallbeinwriting0'1'
itshallbenulland
void.
(2)Itshallcontain:
(a)thedesignationofthesecuritiesdeposited;and
(b)thenameanddomicileoftheownerorotherbeneficiaryunder
thecredit;and
(c)theamountO'fandconditiO'nsunderwhiohthecreditisgraded.
Art.949.-Sellingofsecurities.
WheretheborrowerdO'esnotfulfilhisundertakingtomaintainthe
percentageofmarginorfailsto'repay-theloaninaccordancewiththe
termsofthecontraot,thebankermaysellthesecurities.
Section3.PledgeofSecurities
Art.950.-Principle.
Anytransferablesecurities,irrespectiveO'ftheirform,maybepledgedas
providedinthisSeotion.
Art.951.-Obligationsguaranteed.
(1)Transferablesecuritiesmaybepledged
ofanyobligationevenwhere,inthe
amountdueisnotspecified.
(2)Theprovisionsofsub-art.(1)shallapplyto'aguaranteeofobliga-
.
tiO'nswhichareonlycO'ntingentatthetimeofsettingupO'fthepledge.
to'
guaranteetheexecution
caseO'fsumsO'fmoney,the
Art.952.
-
Forms.
(1)AguaranteedcreditorwhoalreadyholdsthesecuritiesinvO'lvedin
someothermannershallbedeemedto'beputinpossessionas
pledgeefromthedateO'fthecO'ntract.
(2)Wherethesecuritiespledgedareheldbyathirdpartyalreadyin
possessioninsonleothermanner;theguaranteedcreditorshallbe
deemedto'beinpossessionfromthetimewhenthethirdpartypos.

221. \
\
COMMERCIA"" CODE
sessorhasplacedthesaidsecuri~esinaspecialaccountwhiohhe
shallopenonfirstcall.
\
(3)Inthecaseofsecuritiesinrespectofwhichthereisacelltifica,tein
aspecificnameconstitutinganentryintheregisterofthecompany
issuingthesecurities,theguaranteedcreditorshallbedeemedtohe
inpossesionfromthetimewhenthetransferbywayofguarantee
hasbeenentered.
Art.953.-Undertakingsofpledger.
Wherethepledgerisnotpersonallyresponsilblefortheobligationguaran-
teed,heshallonlybeboundasamaterialsurety.
208
Art.954.-Securitysetupbybareowner.
Thesecuritysetupbyabareowneronsecuritiessubjecttoausufruct
shallextendasofrighttothefulltitleattheterminationoftheusufruct.
Art.955.-RightsandobligatiolMofholderofsecurities.
Thehold~rofpledgedsecuriltieshastherightsandissubjecttothe
obligationssetforthinArt.897-900.
Art.956.-Statusofathirdpartypossessor.
Athirdpartyagreeduponaspossesso,rbywayofpledgeshallbedeemed
tohaverelinquishedanyrightofdetainertohisadvantageinrespectof
aUearliergroundsunlesshehasexpresslyreservedthereoningivinghis
acceptance.
Art.957.-Preferredrightsofpledgee.
Thepreferredrightsofthepledgeesubsistatthedatethereof,bothas
betweenthepartiesandasregardsthirdparties,ontheproceeds,amounts
reimbursedorinst,rumentsofreplacementofthesecuritiespledged.
Art.958.-Failureofpledgertomeethisobligations.
Wherethepledgerfailstomeethisobligations,thedebtguaranteedshall
becamedueimmediately,unlessnewsecuritiesofanequivalentamount
areproducedwithoutdelaytoreplacethesecuIitywhichdoesnolonger
existorisimperilled.
Section4.DocumentaryCredits
Art.959.-Definitions.
(1)Adocumentarycreditisacreditopenedbyabankprovidingfor
paymentagainstpresentationofspecifieddocumentstotheopen-
ingbankortoitsagent.GoodsrepresentedbysuchdocUmentsmay

222. COMMERCIAL CODE 209
beheldanddisposedofbythebankinaccordancewiththeterms
agreedbetweenthebankanditsprincipal.
(2)AdocumentarycreditisindependenJtofanycontractofaleon
whiohitmaybebasedandtowhichahankisnotaparty.
Al't.960.-Obligationsofthebank.
Thebankopeningtheoreditshallhonourtheconditionsastopayment,
acceptance,discountornegotiation.
Art.961.-Revocableandirrevocablecredits.
Adocumentarycredi;tmayberevocableorirrevocable.Unlessotherwise
provided,acreditisdeemedtoberevocableevenifithasbeenopenedfor
aspecificperiod.
Art.962.-Effectsofrevocablecredit.
Revocablecreditsarenotlegallybindingundertakingsbetweenbanksand
beneficiaries.Suchcreditsmaybemodifiedorcancelledatanytime
withoutnoticetothebeneficiary.Whenacreditofthisnaturehasbeen
transmittedtoabranch,ortoanotherbank,itsmodificationorcancella.
tioncantakeeffectonlyuponreceiptofnoticethereofbysuchbranch
orotherbank,priortopaymentornegotiation,ortheacceptanceof
drawingthereunderbysuchorotherbank.
Art.963.-Effectsofirrevocablecredit.
IrrevocablecreditsaredefiniteundertakingsbyaniIsuingbankand
constitutetheengagementofthatbanktothebeneficiaryor,asthecue
maybe,tothebeneficiaryandbonafideholdeI'llofdraftsdrawnthere-
underthattheprovisionsforpayment,acceptanceornegotiationcon-
tainedinthecredit,willbedulyfulfilledprovidedthatthedocuments
or,astihecasemaybe,thedocumentsandthedraftsdrawnthereunder
complywiththetermsandconditionsofthecredit.
Art.964.-Confirmqtionofirrevocablecredit.
(1)Whentheissuingbankinstructsanotherbanktoconfirmitairre-
vocablecreditandwhenthelatterdoesso,theconfirmationimpliesa
definiteundertakingoftheconfirmingbankasfrom.thedateon
whichitgivesconfirmation.
(2)Incaseofcreditsavailablebynegotiationofdrafts,theconfirma.
tionimpliesonlytheundertakingoftheconfirmingbanktonego-
tiatedraftswithoutrecoursetodrawer.
(3)SuchJUldertakingscanneitherbemodifiednorcancelledwithoutthe
agreementofallpersonsconcerned.

223. 210 COMMERCIAL CODE
(4)Whenacorrespondentisinstructedbycableortelegramtonotify
aletterofcredit,theissuingbankmustsendtheoriginalofthesaid
letterofcredittothesaidcorrespondentifitisintendedtoputthe
documentitselfintocirculation.Ifanyotherprocedurewerefollo-
wed,theissuingbankwouldberesponsibleforallconsequences
whichmayresulttherefrom.
Art.965.-Obligationtoverifydocuments.
'I1hebankBohallsatisfyitselfthatthedocumetsconformstriotlytothe
instructionscontainedinthecredit.Whenitrefusesdocumentsthebank
shallnotifythepresenterwithinasshortatimeaspossibleandinform
ibimoftheerrorsfound.
Art.966.
-
Liabilityoft.hebank.
Thebank.shallnotincuranyliabilitywherethedocumentsareontheir
faceinconformitywiththeinstructionsreceived.Itshallnotincurany
obHgationinrelationtothegoodswhicharethesubjectofthecredit
opened.
Art.967.-Transferanddivisionofcredit.
Adocumentarycreditisonlytransferableordivisiblewhereabankis
authorisedtop.ayinwholeorinparttooneormorethirdpartiesonthe
instructionsofthefirstbeneficiary.Acreditisonlytransferableonthe
expressorderofthebankopeningthecredit.Itissotransferableonce
only,unlessotherwiseprovided.
BOOKV.BANKRUPTCYANnSCHEMESOFARRANGEMENT
TITLEI.GENERALPROVISIONS
Art.968.-Scopeofapplication.
(1)Theprovisionsof,thisBookshallapplytoanytraderwithinthe
meaningofArt.5ofthisCodeandtoanycommercialbusinessorga-
nisationwithinthemeainingofArt.10ofthisCodewiththeexcep-
tionofjointventures.
i
(2)Withoutprejudicetosuchprovisionsasareapplicabletophysical
personsonlyortotheprovisionsofTitleIVapplicabletobusiness
organisationsonly,theprovisionsofTitlesI,II,IIIandVofthis
Bookshallapplytotradersandcommercialbusinessorganisations.
Art.969.-Conditionsofbankrupky.
Any-traderwhoIImssuspendedpaymentsandhasbeendeclaredbankrupt
shallbedeemedtobebankrupt.

224. COMMERCIAL CODE 211
Art.970.-Bankruptcyoffact.
(1)Wherenojudgmentinbankruptcyisgiven,bankruptcyshallnot
resultfrommeresuspensionofpayments.
(2)Asentencemaybepassedbyac.riminalcourtinrespectofbankrupt-
cyoranyoffenceconnectedwithbankruptcynotwithstandingthat
suspensionofpaymentshasnotbeenestablishedbyajudgmentin
bankruptcy.
Art.971.-Factsconstitutingsuspensionofpayments.
SuspeDllionofpaymentsshallresultfromanyfact,actordocumentshow-
ingthatfJhedebtor.isnolongerabletomeetthecommitmentsrelatedto
hiscommercialactivities.
Art.972.-Noticeofsuspensionofpayments.
Anytraderwhosuspendspaymentofhiscommercialdebtsshallwithi;
fifteendayefileanoticetoiIIhiseffectwiththeregistrarofthecourthaving
jurisdictionunderArt.974or1157,witihaviewtotheinstitutionof
bankruptcyproceedingsortheapprovalofaschemeofarrangement.
Alt.973.-Documentstobeanne:cedtothenotice.
(1)Thefollowingdocuments,datedandsigned,shallbeannexedtothe
noticegiven~ Art.972:
(a)thebalancesheetofthefi.!bI;
(b)theprofitandlossaccount;
(c)alistofcommercialcreditsanddebts,with1henamesandaddress
ofthecreditorsanddebtors.
(2)Reasonsahallbegiveninthenoticewhereanyofthedocuments
requiredundersub-art.(1)cannotbeprovidedorisincomplete.
TITLEn.BANImUFl'CY
Chapter1.Judgmentinbankruptcy
Art.974.-Coufthavingjurisdiction.
(1)TheEthiopianCOUrthavingjurisdictioninbankruptcyproceedings
shallbethecourt.oftheplacewherethebusinessofatraderwhois
apersonissituateor,wherethereismorethanonebusiness,theplace
wheretheprinciPalbusinessissituate.
(2)SubjecttotheprovisiODIIofinternationalconventions,theEthiopian
courtshallhavejurisdiotio.nnotwiJth.standithattheprincipalplace
ofbusiDessisabroad.andaforeipcourthasexercisedbankruptcy
juriadi.ction.

225. 212 COMMERCIAL CODE
Art.975.-Proceedingshowinstituted.
Bankruptcy~oceer1.ingsshallbeinstitutedbywayofpetitionmadeby:
(a)thedebtor;or~(1.
~
(b)oneormorecreditors;or
«()thepublicprosecutor;or
(d)thecourtitself.
Art.976.-Preliminaryinvestigation.
(1)Thecourtmay,whereitthinksfit,appointajudgeforthepurpose
ofinvestigatingintotheaffairsandactivitiesofthedebtor.
(2)Anyjudgesoappointedmayrequiretheassistanceofatrustee.
(8)Aninformationcollectedshallbereportedtothecourt.
Art.977.-Determinationofthedateofsuspensionofpayments.
(1)Atthefirsthearingor,whereappropriate,onreceivingthereport
underArt.976,thecourtshall:
(a)fixthedateofsuspensionofpayments;and
(b)subjecttotheprovisionsrelatingtosooemesofarrangement,
declarethedebtorbankrupt.
(2)Wherethedateofsuspensionofpaymentsisnotfixed,IUobdate,
subjecttotheprovisionsofArt.978,slhallbedeemedtobethatof
thejudgmentdeclaringthedebtorbankrupt.
Art.978.-Extensionofthedateofsupensionofpayments.
(1)ThedatefixedunderArt.977(2)maybeextended,afterthejudg-
mentinbankruptcy,byoneormorejudgmentsgivenontheapplica-
tionof:
(a)thetrusteeoranyinterestedparty;or
(b)thep,ublicprosecutor;or
(c)thecourtitself.
(2)Noapplicationundersub-art.(1)maybeentertainedaftertheex-
piryoftheperiodepecifiedmArt.1046andthedateof8U8pensionof
paymentsmaynotbealteredupontheexpiryoflIuchperiod.
(3)Innocasemaythedateofsuspensionofpaymentsbeearlierthantwo
yearsbeforethejudgmentinbankruptcy.
Art.979.-Bankruptcyafterretirement.
(I)Atraderwthoisapersonmaybedec1aredbaakruptwithinoneyear
fromhisnamebeingstruckoffthecommercialregisterwherehehad
suspendedpaymentspriortosuohstrikingoff.
(2)Wherethetraderwasnot
~
registered,hemaybedeclaredbankruptat
anytimeafttrhavingsuspendedpayments.

226. COMMERCIAL CODE
31;1
Art.980.-Bankruptcyafterdeath.
(1)WhereatraderwhoisaperIODdieIafterhavingIU8p8I1dedpapneDt8,
hemayhedeclaredbankruptwithinonerear8lIerLis...
(2)Thepetitionmaybelodgedby:
(a)acredi,tor;or
(b)thepublicprosecutor;or
(c)thecourtitself.
(3)Anheirmaylodgeapetitionforbankruptcyinordertopreveatthe
IIB88tsofthesuccessionbeingmixed'Wi1Jb.hisownproperty.
(4)Adjudicationofbankruptcyafterdead1eha11auspeudtheeffectof
theseparationofestatesobtainedbythec:reditcmofthedeoeued
undertheprovisionsoftheCivilCode.
Art.981.-Judgmentinbankruptcy.
Ajudgmentinbankruptcyaha11appoiDtaCOIDD1is8ionerinbeDkruptcy
andoneormoretrusteesinbankruptcy.
Art.982.-Enforcementofjudgmentl.
Alljudgmentsand~rdersinbankruptcyahallbeenforeedproriIicmaJly.
Art.983.-Publicationofjudgment..
(1)EJ&1tractsfromjudgmentsgivenunderArt.977,979and9808baUbe
senttothedebtor,thetrusteeandthepetidoniagareditororheir
notlaterthanthedayfollowingjudgment.Thealftctah8l1givethe
namesoftheparties,theoperativepartandthedateofthejrntpn'Rt.
(2)AnextractshallbepostedbytheregistraratthemaineDtranoeofthe
courtonthedayfollowingthejudgmentanditshallremain10p08tecI
foraperiodofthreemonths.
..(3)Theregistrarshallsendanextracttothepublicpl'08eC1ltor.
(4)Theregistrarshallsendthreecopiesoftheatracttotbeofficialin
chargeofthecommercialregisterwithaviewtovaryingtheentry
intheregister.Suchvariationshallbemadeinthelocalrep.ter,no-
tifiedtothecentralregisterandpubliahedintheofficialCommeroial
GazetteinaccordancewtihtheprovisionsofBookI,TitleIV,of
thisCode.
.
(5)Anextractshallbepublishedinanewspaperempoweredtopubliah
legalnoticescirculatingattheplacewheresuspenaionofpayments
tookplace.
(6)Publicationshallalsobemadeattheplaceswlherethedebtorcarries
onbusiness.
-,

227. 214
COMMERCIAL CODE
Art.9840.-Applicationtosetasidejudgment.
(1)Anapplicationtosetasideajudgmentinbankruptcyshallbemad
withineightdaysfromthedateofsuchjudgment.Inrespectofjud{
mentssubjecttopostingandtoinsertioninnewspapersempowered\
publishlegalnoticesorintheofficialCommercialGazette,theperio
oftimeshallrunonlyfromthedatewhenthelastrequirementh~
beensatisfied.
(2)Anapplicationtosetmaynotbelodgedbythep.etitioner.
(3)Anapplicationtosetasidelodgedbythedebtorshallnotsusper
judgment.
Art.985.-Judgmentonapplicationtosetaside.
(1)Ajudgmentrejectinganapplicationtoseta!li.deshallbenotifiedt
thepersonhavinglodgedtheapplication.
(2)Ajudgmentsettingasideanadjudicationofbankruptcyshallbeno
tifiedtothe'trustee,thecreditorhavingpetitionedandthedebtor,
wherethe'debtorhasnotlodgedanapplication.Theprovisionsof
Art.983shallapply.
Art.986.-Appealagainstjudgment.
(1)Anappealagainstajudgmentinbankruptcymaybelodgedwithin
fifteendaysfromnotification.
(2)Theappealshallbeheardsummarilywithinthreemonthsandthe
judgments.hallbeenforceableimmediateLy.
Art.987.
-
Judgmentsnotopentoapplicationstosetasideortoappeal.
(1)Thefollowingjudgmentsslhallnotbeopentoapplicationstoseta8ide
orappeal:
(a)thoseconcerningtheappointmentorreplacementofthecom.
missionerinbankruptcy,ortheappointmentorremovalof
trustees;
(b)thosepronouncingastorequestsfordischargeandastorequests
forassistancetothedebtorandhisfamily;
(c)thoseauthorisingthesaleofpropertyandgoodsformingpartof
assets;
(d)thosebywhichthecourtdecidesuponanyapplicationtosetaside
ordersmadebythecommissionerinbankruptcy!Withinthescope
ofhispowers;
(e)thoseauthorisingtheoperationofthebnsiness.
(2)Thecommissionerinbankruptcymaynotappeari.aproceeding:>unde'
sub-art.(1)td).

228. COMMERCIAL CODE 215
Art.988.-Settingasideoftheadjudication.
(1)Anadjudic&tionshallbesetHidewhere,betweent!bepronouncement
.ofthejudgmentandthedateofthecmIergiveninrespectofanap-
plicationtosetasideoranappeal,thebankrupthasrestoredhisaf.
fairsbyrepayinghiscreditorsorbyobtainingacomposition.
(2)TheeffeCtofactstakenbype1'I0128reaponsibJeforconductingbank.
ruptcyp~ shallnotbeaffected.
Chapter2.Personsresponsibleforconducting
BankruptcyProceedings
Section1.TheCourt
Art.989.-Powersofthecourt.
ThecourtwhiClhhasdeclaredthedebt~rbankruptshallsuperviseallbank.
ruptcyproceedingsandshallmakeordenonInII>tterswhichareout.
sidethepowersofthecommissioner.Itshallhearappealsfromordersof
thecommissioner.
Art.990.-Jurisdiction.
Thecourtwhichhasdeclaredthedebtorbankruptshallhavejurisdiction
tohearallclaimsarisinginthebankruptcy,unlesstherebeclaimsinrem
concerningimmovablepropertywhichremainsubjecttotheordinary
rulesrelatingtojurisdiction.
Section2.Commissionerinbankroptcy
Art.991.-powersofthecommissioner.
(1)Thecommissionershallhavepowertosuperviseanddealwithall
mattersconcerningtheba~ptestate.
(2)Heshallrefertothecourtanyclaimswhichfallwithinthejurisdic.
tionofthecourtandthecourtinitsdecisionsshanmentionsuch
reference.
(3)Heshalltakeorcausetobetakenbythecompetentauthoritiesall
stepsandmel!suresnecessarytopreservetheassets.
(4)Heshallcallthecreditors'committeeasrequiredbylaworwherehe
considersittobenecessary.
(5)Whereitisintheinterestsoftheestate,heshallauthorisethetrustee
toappointU8istantyunlesesuch,anappointmentisreservedtohim
,bylaw.
(6)Heshallauthorisethetrusteeinwritingtoenterappearanceinlegal
proc_~ings.
v

229. 216 COMMERCIAL CODE
~.
.".
Art.992.
-
Ordersoft.hecommissioner.
(1)OrdersofthecommissionershaUbedepositedwithoutdelayinthe
courtregistry.Allinterestedpartiesshallbenotifiedbyregistered
letter.
(2)AnyinterestedpartyID4yapplytosetasideanysuchorder.Applica.
tionshanbemadebynotificationto,theregistrywithintendaysof
thedateofthesendingoftheregisteredletter.
(3)Thecourtshalldecideontheseapplicationsatthefirsthearing.
Art.993.-Replacementofcommissioner.
Thecourtmayatanytimeofitsownmotionreplaceacommissioner
byanotherofitsmembers.
Section3.Trustees
Art.994.-Appointmentoftrustees.
(I)Trusteesshallbeselectedfromalistofqualifiedpersonsofgood
reputeresidentinEthiopia.Suchlistshallbepreparedat,thebegin-
ningofeachyearbytheMinistryofCommerceandIndustry.
(2)Thetrusteesshannotexceedthreeinnumber.
(3)Whereseveraltrusteesareappointedthey'shallactjointlyand
severally:
Providedthatthecommissionermayincertaincircumstancesauthorise
oneormoreofthemtoactindividually.Trusteessoauthorisedshall
alonebeliable.
(4)Thefollowingpersonsmaynotbeappointedtrustees:
(a)apersonwhohasbeendeclaredbankrup,t;or
(b)apersonwhohasbeendeprivedofcivilrights;or
(c)arelativebyconsanguinityoraffinityofthedebtortothefourth
degreeinclusive:or
(d)acreditor.
(5)Thetrusteesmaynotacquirethegoodsofthedebtor.
Art.995-Powersoftrustee.
(1)Thetrusteeshalllieresponsiblefortheadministrationofthebank.
ruptestateunderthesupervisionofthecommissioner.Heshallreo
presenttheuniversalityofcreditorsinrelationtothirdparties.
(2)Hemaynotassign~fw'tctionsbutmay,withtheapprovalofthe
commissioner,delegatetheminrespectofisolatedtransactions.

230. COMMERCIAL CODE 217
Art.996.
-
Depo6itoffunds.
(1)Anyfunds.receivedbythetruatee,lesstheamOtmtadeterminedby
orderofthecommissionertom~tlegalcostsandDl8ll8{4'ementex-
peDllll,shallbedepositedwithoutdelayintheStateBmkofEthiopiain
anaccountopenedinthewuneofthe~pt estateandmaynot
be-withdrawnexceptbywrittenorderofthecommissioner.
(2)Atrustee8ha11beremovedwherehefailstocomplywiththeprovisions
ofthisArticle,withoutprejudicetosuob:civilsanctionsorcrim~nal
penaltiesasmaybeappropriate.
Art.997,'-Recourse-againstact&oftrustees.
Thebankruptoranyotherinterestedpersonmayobject10anyactofthe
truBteesinrespectofthebankruPtestatetothecommissionerwhoshall
decideontheobjectionwithinthreedays.
Art.998.-Removaloftrustees.
(1)Thecommissionermayrequirethecourttoremoveatr1I8Ieeonthe
applicationofthedebtororthecreditors'commiUee01'ofhisown
motion.
(2)Wherethecommissionerhasnotdealtwithsuchapplications'WIitihin
fivedays,theapplicantsmaymovethecou,rtthemselves.
(3)Thecourt,sit.tinginchambers,shallconaiderthereportofthecom-
missioner,theexplanationsofthetrusteeandtheopinionofthepub-
licprosecutor.Judgmentshallbedeliveredinopencourt.
Art.999.-Replacementoftrustees.
ThecommissionershallmovethecourttoappointadditionaltrusteesOl'to
replaceexistingtrustees.
Art.1000.-Liabilityoftrustees.
(1)Trusteesarepublicofficialsintheexerciseoftheirfunctions.They
shallcarryouttheirduties'Withallcareandshallshow,whereneces-
sary,thattheyhaveexercisedt1henecessarycare.
(2)Theyshallkeeparegisterwhichhasbeenstampedfreeofohargeby
thecommissionerandmakeCJhereindaytodayen~ofaobdone
bythem.
(3)UntilthebankruptcyproceediD88arecompleted,claimsagaiD8t.
trusteewhoihasbeenremovedshall,'WIi.ththepriorconsentofthe
commissioner,beinstitutedbythetrusteewtho~laceshim.
(4)Atrusteewhoretiresfromoffice,evenduringbankruptcyP~T,
shallgiveareportonibisactivitiesunderArt.1090.

231. 218
COMMBRCIAL CoDE
Art.1001.-Remunerationoftrwteu.
(1)'DIecostsandfeeeofhu8teesshallhefixedbythe~i..oner.
(2)Feesshallbepaidaf,tertbesubmissionofthereportunderArt.1090.
Anadvancemaybemadetothetrusteeswiththe00DBeDtofthecom.
mission,er
.andforgoodcause.
(3)11hebankruptandthecreditorsmayobjecttothecourtagainstan
ordermadeundersub-art.(1)withinei~tdaysofthemakingofthe
order.Theobjectionshallbeheardinchambers.
(4)ThetrusteesshallheentitledtonootIherpaymellitthancostsandfees.
AnyamountspaidincontraventionofthisArticleshallberefunded,
withoutprejudicetosuobcivilsanctionsorcriminalpenaltiesasmay
beappropriate.
Section4.Creditors'committee
Art.1002.-Appointmentofcommittee.
(1)T,hecreditors'committeeshallbeappointednotlRlterthantendays
aftertlhedepositwitJhtheregistraroftheordershowingthelistof
creditorsprovidedinArt.1044.
(2)Aprovisionalcreditors'committeemaybeappointedifthecommis.
sionerthinkssuohIisteptobedesirable.
(3)ThreeorfivecreditorschosenbythecoIl1JDUeionerfromamongall
thecreditorsshallformthecreditors'colDJIlittee.Thecommissioner
shallappointthechair"Inan.
(4)'Dhemembersofthecommitteemayontheirrequestbereplacedby
thecommissioner.Theymayonlyberemovedbythecourtonthe
proposalofthecommissioner.
(5)Norelativebyconsanguinityoraffinityofthedebtor,uptothefourth
degreeinclusive,maybeamemberofthecreditors'committee.
Art.1003.-Functionsofcommittee.
(1)Thecommitteeshallgiveitsadvicewheresuchisrequiredbylaw
or.heconsidersameetingdesirable.
(2)'Dhechairmanshallcallthecommitteewheneveritsadviceisrequested
orheconsidersameetingdesirable.
(3)Decisionsofthecommitteeshallbebyamajo:l.'ityvote.
(4)'Dheeornmitteeshallhavespecialregardtotheverificationofthe
accountsand1Ihestatementofaffairspreparedbythedebtorandto
thesupervisionoftheactsofthetrnstees.
(5)11hecommitteemayatanytimerequireinformationonNhestateof
thebankruptcyproceedings'andonthepositionofreceiptsand

232. COMMERCIAL CODE
219
payments.l1hecommitteeshallheconsultedbytheh'usteeswith
regardtoalllegalproceedings.
(6)Membersofthecreditors'committeeshallbeliableonlyinrespect
ofgrossnegligence.
(7)Thecommitteeisentitledtonoremunerationotherthanthereimbur-
sem~ntofexpensesapprovedinwritingbythecommissioner.
Chapter3.ProvisionalandConservatoryMeasures
Section1.ConservatoryMeasures
Art.1004.-Closingofdebtor'sbooks.
(1)Thetrusteesshallsummonthedebtortobepresentatthewriting
upandclosingofthebooks,theprovisionsofArt.1011havingbeen
compliedwith,wherenecessary.
(2)Wherethedebtordoesnotappear,heshallbesummonedby
registeredlettertoappearwithinforty-eighthoursandtoproduce
thisbooksiftheyareinhispossession.
(3)Hemayappearbyhisattorneyifhesatisfiesthecommissionerthat
therearesubstantialreasonspreventinghispersonalappearance.
(4)Wherethedebtorfailstoappear,eitherinpersonorbyhisattorney,
orwhereheabsconds,thecommissionershallinformthepublic
prosecutorwhoshalltakethenecessarystepstosecurehisattendance.
Art.1005.-Preservingdebtor'srights.
(1)Thetrusteesonassumingofficeshalltakeallstepstopreservethe
rightsof,!lhedebtorinrelationtohisowndebtors.
(2)Theyshallenforceregistrationofmortgagesuhereregistrationhasnot
notbeenenforcedbythedebtor.Registrationshallbemadeinthe
nameofthebankruptestatebythetrusteesonproofoftheirstatus.
Art.1006.-Mortgageregistrationonimmovableproperty
ofdebtor.
(1)ThetrusteesshaIIcauseregistrationtobeeffectedinthenameof
thebankruptestateonallimmovablepropertyinthepossessionof
thedebtororwhichmay,atalaterdartecomeintohispossession.
(2)~ortgages!ili.allnatberegister(1onimmovablepropertyacquired
bythedebtorafterpaymentofthelast,dividendunderacomposition
or,wherethereisnocomposition,afterthefinalclosureofthe
winding-upprocedure.
Art.1007.-Registrationofmortgageonbusiness.
(1)Thetrusteesshallregist£<rthelegalmortgageprovidedinArt.172
(1)(b)ofthisCodechargingthedebtor'sbusinessorbusinesses.

233. 220
COMMBBClAL CoDa
(2)Theentryshallshow:
(a)thenameandaddressofthedebtor;
(b)thedateofthejudgmentdeclaringthedebtorbaakrupt;
(c)thecoUl1thavilIlgdeclaredthedebtorbankrupt;
(d)thepurposesandaddressofthebusiness;
(e)thepartsof<thebusinesstowhich<themortgageextends;
(f)theaddressofanybranchoragencymortgagedwith,thebusiness,
ifany.
(3)TheprovisionsofArt.179.193ofthisCodeshallapplytoamortgage
underllhisArticle.
Art.1008.-Reporttocommissioner.
(1)Withinonemonth,fromassumingoffice,<thetrusteessballsendto
thecommissionerareportontheaffairsofthedebtorstatinghow
theyhaveoccurred.
(2)ThecommissionerShallsendtherepo,ttothepublicprosecutor
andhisobservationsthereon.Wherehehasnotreceivedthereport
withintlheprescribedperiod,heshallinformthepublicprosecutor,
explainingthecauseofthedelayinthesubmissionofthereport.
Section2.Seals
Art.1009.-Affixingofseals.
(1)11hecourtmaywthendeclaring.thedebtorbankruptordertihatseals
beaffixedtoallstores,paycounters,tills,bill-cases,books,documents,
papers,furnitureandchattelsbelongingtothedebtor.
(2)Wherethedebtorhasabscondedorwheretherehasbeenmisap-
propriationofthewholeorpartofthedebtor'sassets,thecompetent
authoritiesoftheirownmotionoronanapplicationmadebya
creditormay,beforeadjudication,affixseals,tothepropertyspecifi-
edinsub-art.(1).
Art.1010.-
Propertynotsubjecttoaffixingofseals.
(1)Thecommissionermay,onthe'applicationofthetrustees,dispense
themwithaffixing,orauthorisethemtoremovesea1sonthepro-
pertyspecifiedhereinafter:
(a)suchmovablepropertyandchattelsneeded!:Jythedebtorand
hisfamilyashavebeensetoutinalistsubmittedtothecom-
missioner;
(b)perishablegoods;

234. COMMERCIAL CODE 221
(c)propertynecessaryforthecontinuedoperationofdiebuaine8
orundertaking,Wlheresuohconti.iJ.uedoperationhas.been
authrorised.
(2)Allpropertyspecifiedinsub.art.(1)shallheliStedandvllluedby
thetrustees,inl\ihepresenceofthecompetentaullhoritieswho8IJall
signthelist. '
Art.1011.-Propertyremovedfromunderseal.
(1)WherehooksandaccountingdocumentshavebeenlCaledunderArt.
1009(1),thesealsshallberemovedandthebooksanddocuments
handedtothetrusteesbythecompeteDJtaul\ihoritiesdrerbaYing
beenclosedbytheSllli.dauthoritiesWlhichshallrepo...""t0111iIIheslateof
thebooksanddocuments'WIhenihandedover. '
(2)T,hecompetentauthorities$hallremovefromundersea!soortterm
billsorbillstohepresentedforacceptanceorinrespectof'WIhioh
conservatorystepsarerequired,]istthemandhandth.emtothe
trusteesforpurposesofcollectionorotherwise.Areport8hallbe
preparedandsenttothecommissioner.
~.1012.-Correspondenceaddressedtodebtor.
Thedebtorhas.therighttobepresentwhenlettersaddressedtoIIWn81'e
openedbythetrustees.
Art.1013.-Removalofseals.
Withinmv~daysof4IheaffWDgofseals,thetrusteessbal1ask
removaloftheeealsinorder,tow-epareaninveulol1yofthe
property.
fortihe
debtor's
Section3.Inventory
Art.1014.-Preparationanddeposito!balancesheet.
WhereabalancesheethasnotbeenpI'Cliaredanddepositedbythe
debtor,thetrusteesshallwithoutdelayprepareanddepositwiththe
registrarofthecourtabalanceshe~tbasedonthebooks,documents,
papersandotherinformationasareavailabletothem.
Art.1015.-Inventoryofdebtor'spropeny.
(1)An'inventoryofthedehtor'spropertyshallbeprepared,thedebtor
havingbeensummonedbyregisteredletterrequiringanacknow-
ledgement.
(2)AJlpropertyofthedebtorunderArt.1010(1)shallal80heverified.

235. 222 COMMERCIAL CODE
(3)Theinventoryshallheprepardintwooriginals,ODebeingdepo-
sitedintheregistryofthecourtandtheotheronebeingretainedby
~hetrustees.
(4)'I1he.trusteesmay,withtheconsentofthecommissioner,employ
suitablepersonsinpreparingtheinventoryandvaluationofthe
debtor'sproperty.
Art.1016.-Inventoryintheeventofbankruptcyafterde4th.
Wheretheestateisdeclaredbankruptaftertibedea1ihofthedebtorand
noinvenfA?ryhasheenprepared,orwihere1llredebtorhasdiedbeforethe
inventoryhasbeencompleted,theheirs9hellbedulysUmmonedtobe
presentatthepreparation~rcompletionoftheinventory.
Art.1017.-Rightsofpublicprosecutor.
Thepublicprosecutorhasthe~ttobepresentatthepreparationof
1!beinventoryandtoinspectatany.timeanydocumeuta,booborpapers
in~b&nkru.ptcyproceedings.
Art.1018.Handingovertotrusteesofdebtor'sproperty.
Oncompletionoftheinventory,allgoods,money,securities,boob,
papersanddocuments,furnitureandchattelsofthedebtOrshallbe
handedtothertl'uBteesandanoteofsuobhandingovershallbemadeat
1befootof1fbemventOl1y.
Chapter4.Effectofadjudicationinbanlauptcy
Section1.Effectasregardsthedebotor
Art.1019.-Restrictionsondebtor'smovements.
'I1hedebtor8ihal1notleavetheareain'WIhioh!heresideswi11hout,theper.
missionoftheCOD1IIli88ioner.TheprovisionsofArt.433oftihePenal
Codesballapplywherettihedebtorbreaksanysuchprohibition.
Art.1020.-AssistGncetothedebtorandhisfamily.
Thecommissionermay,when:requestedtodosobythetrustees,permit
partofthebankruptestatetobeappliedinsupportingthedebtoramd
hisfamily.
Art.1021.-Employmentofdebtorbytrustees.
Thedebtormaybeemployedbythetrusteesonsuobtmms~dconditions
asthecom.."..;onersba11fix,tofacilitate<thewinding-up.
Art.1022.-ProhlibitWnsandforfeitures.
Thebankruptmaybesubjected.to81dJ.proIdbItiou01'forfeituresasare

236. COMMERCIAL CODE 223
providedbyIaw.Unlessotherwise'providedbyIaw,suchprohibitionsor
forfeituresshallceasetobeeffectivewheretheconvictedbankruptis
reinstated.
Art.1023.-Bankrupturnibletodealwit.hhisproperty.
Abankruptshallnotadministerordisp.oseofhisproperty,however'
acquired,fromthedayheisdeclaredbankruptuntilheis,wsClhafged.
Art.1024.-Legalproceedin.lls"
Afteradjuwcation,alllegalproceedingsshallbeinstitutedandallap-
plicationsforexecutionbemadebyor'againstthettnstees.Thebankrupt
maybeauthorisedtointerveneinan)"proceedings.
Art.1025.-Universalityofcreditorsinbankruptcy.
(1)Asfromtheday~fthejudgment'inbankruptcy,allcreditorswhose
claimsarenotsecuredbyaspecialprivilege,apledgeoramort-
gage,shallbringtheirclaimstOlgetherintheuniversalityofcreditors
inbankruptcy.
(2)Theuniversalityisalegalentity.Itm8iyacquirerightsorincur
liabilitiesandshallberepresentedbythetrustee.
Art.1026.-Suspensionofindividualsuits.
Thejudgmentinbankruptcyshallpreventanycreditorwho~ecIaimis
includedintheuniversalityfrombringinganindivi'dualsuit.Asfrom
thedayofthejudgment,suchc,reditormaynotattach,thedebtor'spro.
perty,whethermovableorimmovable.
Art.1Q27.-
Outstandingdebtsrendereddue.
(1)OnadjudicationalldebtsowingtoI1hedebtorshallbecomedue
immediately.
(2)Debtsexpressedinfilreigncurrenciesshall
currencyattheofficialrateofexchangeon
beconvertedintolocal
thedayofadjudication.
Art.1028.-Interestnottorun.
Interestondebts,withtheexceptionofdebtsguaranteedbysecurityin
rem,shallceasetorunagainstthebankruptestate"asfromthedayof
thejudgment.Onlysumsarisingfrompropetrygivenassecuritymay
betuedtopayinterestonsecu~'eddebts.
Art.1029.-Actspriortoadjudicationinvalid.
(a)GratUitous'assignmems;
,
(b)paymentsofdebtsnotdue,whetherin
set-offorotherwise;
cashorbyassignment,sale,

237. 224
COMMERCIAL CODE
(c),paymentsofdebtsdueotherwisethanincash,bynegotiableinstru.
m6lltorbytransfertoabank;
(d)securitiessetuponthepropetryoftlhedebtorinrespectofdebts
contractedbeforethesettingupofsuchsecurities,betweenfifteen
daysbeforethedateofsuspensionofpaymentsandthedateof
adjudicationshallbeinvalidandshallnotaffectthecreditorsofthe
bankrupt.
Art.1030.-Otheractspriortoadjudicationmaybeinvalidated.
OtherpaymentsmadebythedebtorinrespectofdebtSdueandallacts
forconsiderationenteredintobythedebtorafterthedateofsuspension
ofpaymentsmaybeinvalidatedontherequestofthetrU5teeswherethe
parties'Whohavereceivedpaymentorhavedealt.withthedebtOl'did
soknowingthatsuspensionofpaymentshadtakenplace.
A.N.1031.-
Rightsregisteredpriortoadjudicationinvalid.
(1)Rightsarisingoutofsecuritiesinremvalidlysetupmayheregister.
eduptothedateofadjudication.
.
(2)Registrationeffectedaftersuspensionofpaymentsorwithinone
monthbeforesuspensionmay.beinvalidatedwheremorethanone
monthhas.ela~betweenthelactcreatingthesecurityandthedate
ofregistration.
.
Art.1032;-
Statusofsecuredcreditorranking'after.partywhosesecured
claimisinvalid.
Acreditorsecuredbyamortgageonanimmovableoronthebusiness
whoisolassedafteracreditorwhoseclaimsecuredbymortgagehas,been
invalidatedshallsubstitutehimselfforsuchcreditorinthe~trihution
ofthepriceoftheimmovableoroftl1ebusiness.Heshallpayintothe
assetsinthebankruptcythedifferencebetween.thesumdistributedto
himandthesumwlhichhewouldhavereceived,hadthepriorsecured
claimnotbeeninvalidated.
Art.1033.-Negotiableinstrumentspaidaftersuspensionofpayments.
(1)Wherenegotiableinstrumentshavebeenpaidbetweenthedate
ofsuspensionofpaymentsandthatofadjudication,proceedingsfor
reimbursementofsumssopaidmayonlybeinstitutedagainstthe
thirdpart:yhavingfirstreceivedthevall1eoftheinstrument.
(2)Inthecaseofapromissorynote,suchproceedingsmayonlybe
institutedagainstthefirstendorser.

238. Ci)MMERCIAL CODE 225
(3)Theclaimantundetsuh-al'll:.(1)or(2)shallprovethat.theparty
against'WIhomthe.proceedin,gs.areinstitutedkmewofthesuspension
ofpaymentsatthetimeofpaymenJtoftheinstrument.
A,rt.1034.-:-Limitationofactions.
Proceedingsbrou~tunderArt.1029,1030'and1031shallbebarredsIter
,twoyearsfrom,thedateof.adjudication.
Section2.Managementofdebtor'sproperty
Art.1035.-Generaldutiesoftr,ustees.
(1)Thetrusteesshall,with.'thepemUssionofthecommissioner,sellall
depreciable'orperishablegoodsorpropel'itythepreservationofwhich
Lscostly.
(2)Theyshallcollectdebtsand,whereauthorised,continuebusiness
operations.
Art.1036
-
Saleofgoods.
(1)Afterhearingthebankrupt,whetherhepresentshimselfofhisawn
motionoronbeingsummonedbyregjgteredletter,thec~mi;oner
mayauthorisethetrusteestosellothermovablepa'opertyorgoods.
(2)Thecommissionershallfixtheconditionsofsale.
Art.1037.;-Saleofbankruptperson'sbusiness.
Thesaleofab sinessbythetrusteesmayonlybepermittedbythecourt
andthecourtshallfixtheconditionsofthesale.
.
Art.1038.
-'-
Compromiseandarbitrati.on.
(1)Mtertakingtheopinionof,thecreditors'eommitteeand sIter
hea.ringthebankrupt,whetther,hepresentshimselfofihtisownmotion
oronbeingsummonedbyregisteredlettier,thecoinmiSsionermay
authorisethetrusteestocompromiseandarbitrateinrespectofany
claimconcerningthebankruptestate.
'
(2)Wherethevalueofthesubjectmatterofthecompromiseorarbitration
isnotdeterminedorexceedsthejurisdictionoft!hetrustees,the
compromiseorarbitrationshallberatifiedbythecourt.
.
(3)Thebankruptshallbesummonedtoattendtheratificationpro-
ceedi~gsandmaymakeanapplicatiOntosetasidethecompromise
orarbitration.
Art.1039.-Continuation.ofoperationofbusiness.
(1)Thetrusteesmaycontinueoperatingthebwinesaorindwtrywh~re
authorisedhythecourtafterareportbythecoJIlJniesioneranda

239. 226 COMMERCIAL CODE
reoomm.endation.of1Ihecreditors'committee,.andautihorisMionshall
notbegivenunlessitisinrthepub1icorcreW,tors'interest:.
(2)WheretIhebusinesscontinuestooperate,creditors,whoseclaimhas
arisenoutofsuchoperationshallbecreditorsof~euniversality.
'Vheyellallnothesubjecttotheprovisionsreg8.rdingbankruptcyand
shallbepaidfrom1Iheassetsof1Ihebankruptcybefore1Jhecrediltors
whoseclaimsareincludedmtheuniversali.ty.
(3)Insteadofo,peratingthebusinesshimself,rtlhetrusteemaybeautJhorised
bythecommissionertoappointareceivertocarryonthebusiness.
Art.1040.-Continuationofleases.
(1)~s ofimmovablepropertyusedforthebusinessorindustrialope-
rationsofthedebtor,i.ncludingpremisesformingpart'llhereofand
occupiedbyhimorhisfamily,shallnotbecancelledbyreasonof
thelessee'sbankruptcy.
(2)Thetrusteesmayeithercancelorcontinuetheleaseandshallgive
noticetothelessorof11heirdecision!Withinfifteendaysfromdeposit
oftheinventoryasprovidedinArt.1044.Wherethetrusteescontinue
dtel_,theyshallcarryoutr\!hledutiesofalessee.
(3)NoticemaynotbegivenexceptontherecommendationoftheCil'edi.
tors'COIIlIIlitteeand'WithtiheautJhorisaitionofthecommissioner.
(4)Until,theexpiryoftJheperiodmen,tionedinsub-a.rt.(2),movable
propertyusedfor1Ihebusinessorindustryshallnotbedistrained
uponnorshallleasesbecancelled,W1i.tihoutprejudice'toprovisional
measuresand,therightofthelessortotakepossessionofthepre-
mises.Wlherethelessortakespossessionof1Ihepremises,distraint
iseft'ected.
(5)W,here11hetrusteehasinformedtJhelessorof,hismten1iontocontinue
thelease,theleaseshallcontinueunlessthelessorappliesfora
cancellationoftheleasewilthitnfifteendays.
(6)Aclausein1Jheleaseprovidingforimmediatecancellationofalease
intheeventofabankruptcyshalllbeofnoeffect.
(7)Nothmg in,thisArticlesha:lIaffectbheprovisionsofArt.1061
and1062.
Chapter5.Provingofdebts
Section1.Procedureforproving
Art.1041.-Productionofproofbycreditors.
(1)AfteradjudIDation,tIhecreditorsshaiIlproducetotIhe<trusteesproof
of1Jheirdebts,showi~thesumsclaimed.

240. COMMERCIALCODB
227
(2)ThetrusteessbaJ1issuereoei.p18forproofsproduced.They.wI
return1II1eproofsa&erdiebankruptcy
prov-'~8'lireclosedad
sbaJlceasetobe&.ble!forsuchretumafteroneyear.
Art.1042.-Noticetocreditors.
(1)Creditorswhoappearonthebalancesheetandwhohavenotpro.
ducedproofs'WIithinfUteendays£romtheadjudicati.OII1shallberequest-
ed:bythetrusteestoproduceCIbeirproofs.
(2)Suchrequestshaillhemadebynoticein8DeW8p8perempoweredto
receivelegalDotWesandintheofficialCommercialGazette.Such
nolliceintheGazetteshall:refertotJbeissuenumberofthenewspaper
CODItaWingthelegalnoticeissuedunde,rlihisArticle.Nollicetocredi,tors
bylettershaJJ.alsobesent.
(3)Proofsshallbeproduced'WIithinfif.teendaysoftIbepub1icatiOll1inthe
Goette.
Art.1043.-Verificationofdebts.
(1)DebtsshallbeverifiedbythetrusteesinthepmleDceofthecredi.
tors'com.mi.tteeoritsrepresentative,wheresudhcommitteebasal-
readybeenformed.andofthedebtoir.wIbetherhe:pmienuhimself
ofihJsownmotionoronbeingsummonedbyregi8teredletter.
(2)Theinventoryofdebtswhenfinalisedah8iIlbecounter-aignedbythe
COJDJ:I1isIioner.
(3)w:hereadebtisqueriedbythetrusteesinIWIholeorinpart,the
trusteesshallinformtheoreditorbyregisteredletter,andheshall
replytothequeriesorallyorinwritingwithineightdays.
Art.1044.-Depositofinventoryinregistry.
(I)Where,thedebtsbavebeenproved,theb:ultteesIIha11depoeitlIhein.
vemoryofdebtswiththeregist,ry,showingtheproofsedmittedand
theproofsrejected.
(2)TheyshallalsosendtotheI'nmmi..i.oner8li8tofcrediitonolAimi~
specialpreferencesovermovables.
Art.1045.-Notificationofdeposit.
(I)Theregistrarshallinformthecreditorsofthedepositoftheinven-
'toryofdebtsasprovidedinArt.1042(2).
(2)He8Iballgivenoticebyregisteredletterofrejected'debtstothecre-
ditorsconcerned.

241. 228 COMMERCIAL CODE
Art.-1046.'-Claims.
(1)'Anycreditorwhoap.pearsonthebalancesheetorw~ohasproved
hastheright,eitherinpersonorthroughhisagent,tolodgea
claimwiththeregistrybywayofentry011,~esc.hedule,withineight
daysfollowingthenoticeintheofficialCommercialGazette.
(2)Thebankruptmay'alsolodgeaclaim.
Art.1047.--.:Finaldrawing-upofinventoryofdebts.
(1)Upontheexpiryoftheaforementionedperiodofdme,thecom-
missionershallpreparethefinalinventoryofdebts,subjecttoany
claimslodgedwithtiheCOlU't.
. ,
(2)Thetrusteesshallaccordinglyenteronthelistofuncontestedproofs
theadmissionofproofofthecreditorandtheamountofthedebt
proved.
Art.1048.-Judgementuponcontesteddebts.
Contesteddebtsshallbereferredbytheregistrartothefirsthearingtobe
judg~uponthereportof,thecommissioner,afterhavingdulynotifiedthe
partiesbyregisteredletterfiveda~spriortothchearing.
Art.1049.Provisionaladmission.
(1)TheCOUNmaygrantaninterlocutoryorderallowingacreditorwhose
claimiscontestedtojoininbankrup.tcyproceedingsinrespectofsuch
amountasthecourtmaydecide.
(2)Th~registrar$hall.informbyregisteredletterthepartiesconcerned
withinthreedays.
Art.1050.
-
Stayofproceedingsordisallowanceofobjection.
(1)Whereanobjectioncontestingadebtislodgedandsuchobjection
'maycausedelay,thecourt~1ialldecidewlhethertostaybankruptcy
proceedingsuntiltheobjeCtiOnisdecidedonbytheordinarycivil
courtIhavingjurisdicdonortodisallowtheobjection.Wherethecourt
disall~theobjection,itma!yattihesametimemakeanorder
underArt.1049.
(2)Whereadebtgivesrisetocriminalproceedings,thecoUl'ltmayorder
astayofbankruptcyproceedings.Where.thecourtdisallowstheobjec-
tion,itmaynotmakeaninterlocutor.yorderandtihecreditorholding
thecontesteddeb~maynotjoinintiheproceedingsuntiljudgementin
criminalprocCC'lingshasbeengiven.
'

242. COMMERCIAL CODE 229
Ad.1051.-CreditoTlwhosesecurityiscontested.
Whereacreditorholdsasecw.ityinremandonlythesecurityisoontested,
suchorediJtormayjoinintheprooeedings8880UD8ecuredcreditor.
Art.1052.-Creditorsnothavinglodgedproofwit,hinthespecifiedperiodof
time.
(1)Creditorsfailingtolodge~rclaimwi.thintiIrespeoifiedperiodof
mmeshallnotsh¥6in8IIlYdistributionbUittheymaylodgeanobjec-
tionuntilfinaldistriJmtionoftheresidueandeha1lbeerthecostsaris-
ingOUtofsuchobjection.
(2)Anysuchobjectionshallnotsuspendanydistributionorderedbythe
commissioner.
(3)Wherefurtherdistribwtionsaremade,sucltcreditorsshallsharethe,re-
intotheeEentofanamountprovisionallyfixedbyd1ecourtandre-
tainedinreserveuntiladjudicationupontheirobjection.
Art.1053.-Creditorssubsequentlyadmitted.
CreditorsadmitteddterdistributionsOI1'deredbytheOOIDJDiasionershall
havenoclaiminsuchdistributions,buttheymaydeductfromundistribut-
ed88Sets,thedividendsrelatingtotheircladmsionthefintdistributions.
Ad.1054.-Periodoftimeforprovingdebts.
Allproceedingsforprovingdebtsshallbeconcludednotlaterthanfive
monthsfromthedateofthejudgementinbank;ructy.Sudh,periodmaybe
extendedbythecommissionerinexceptionaloases.
Section2.Partiesjointlyandseverallyliableandguarantors
Art.1055.-Proofofclaimsjointlyandseverallyguaranteed.
AcreditorWlhoseclaimhasbeenendorsed011'guar8lIlteedjoinJtlyandsever-
allyby,theb8lIlkruptandotherpersonswhobavesuspendedpaymentsmay
proveina1ltheestatesfortheiIlomiD.Mvalueofibisclahnandebm'einthe
distributionsuntilhiscladmisfuRysatisfied.
Art.1056.-Noclaimasbetweenbankruptestates.
.
Nobankruptguarantors,jointlyandseverallyUable,maycladm.agaiDstone
anol1herin~pectofdividendspaidunderArt.1055,unlessthetotal
amountoftlhedlividendspaidintheseveralbankruptcies~xceedsthetotal
amountof,theclaim.Anysuchexcessshalldevolveupontihepersonshav-
mgtlheotllrersasgtW'8D'tors,intheorderoftheirliability.

243. 230
COMMERCIAL CODE
Art.1057.-CreditorhavingreceivedpaymentonaccountbeforeSWpensioB
ofpayments.
(1)AnyamoUilitpaidpriortosuspensionofpaymentstoacm:litoriWhose
claimisjointlyandseverallyguaraDJteedbythebankruptand.other
personsshallbedeductedinpayinghisclaim.Heshallretain,for
whatremainsduetohim,hisrightsagainstsuclhotJlierpersOlllSor
guarantors.
(2)Anypersonjointlyandseverallyliableoranyguarantor/Woohaspaid
~amountonaocounttowardstIheclaim,~beeDJtitiledtoprove
hisclaimtotheeJlitentoftheamount50paid.
Section3.Rightsofcreditorssecuredbyaguaranteeonmovables
otherthanbusiness
Art.1058.-Guaranteedcreditors.
Creditorswhoseclaimissecuredbypledgeshallbeenteredintheinventory
forpurposesofinformationonly..Wi1Jhtheautlhorisationofthecommis-
siner,thetrusteesmayatany.timepayfOil'andredeemthepropertypledg-
ed,forthebenefitofthee5tate.
7
Art.1059.
--"
Salebypledgee.
Wherethepropertypledgedhasnotbeenredeemedbythetru:rtees,andit
issoldbythepledgeeforasumexceedingtheamouDJtof1Jhedebt,1Iheex-
cessshallbecollectedbythetrustees.Wherethepriceof.saleislessthan
.
,theamountofthedebt,1ilrepledgeemayproveibisclaimfor,thedifferen-
ce,asanunseou,redcreditor. '
Art.1060.~Extentoflessor'spreference.
(1)WherealeaseistermmllitedunderArt.1040,1Ihelessorshallhavea
preferenceinrespectofall.elaimsarisingoutoftlhepettOrmaIWeof
thecontraQtofleaseand.contingentdamagesf~thetwoyearsofthe
leasepriorto1JbeadjudicationofbankruptcyandforC1hecurrentyeu'.
(2)If.11b.eleaseisnotterminated,thelessorwhohasbeenpaidallreDJts
duemaynotclaimpa}'\lllentofanyrentforthecurrentperiodandof
anyrenttofalldue,iftheguarllIlJteesgivenonthemakingof1Ihecon.
tractarestillinforceorifthosegiven8incetheadjudicationofbank.
ruptcyareCOiIISideredtobesufficient.
Art.1061.
-
Removal01movablesfurnishingpremisesleased.
Wheremovable5furnishing11b.epremisesleasedaresoldandremoved,
11b.elessormayexf'!'ci~IMspreferenceasinthecaseofterminationofa

244. COMMERCIAL CODE
Ul
leaseasRrovidedinArt.1060(1),andsuchpreferenceshaD.eDtmdto
afurtherperiodofoneyeartorunfromtheendofthecurrentoyeur.
Art.1062.-Continuationorassignmentofleasebytrustees.
Thetrusteesmaycontinueorassignaleasefortheunexpiredpe,rlod,
providedthattheyortheassigneeshallkeepthepremisesfurnishedwith
movablesofsufficientvalueandcarryoutattheexpiryofeachletting
periodallobligationsarisingOUtoftlheI8IWortheagreement,and
providedfurtherthatthepurposeforwhicl1tlhepr!mlisesareutilised
maynotbechanged.
Art.1063.
-
Sellerofmovableproperty.
(1)WithoutprejudicetotheproviSiionsofArt.1075-1078,tlhegulmmteee
providedintheCiVlilCodewiltlhregardto'theseIlerofmovablepr0-
pertymaynotbesetupagainstthebankruptestate.
(2)Anyprowsioncontrarytovheprovisionsofsuh-art.(1)shaJ1beof
noeffect.
Art.1064.-Paymentofcreditors/wIdingpreferencesovermovables.
(1)OnpresentationofthelistprescrihedinArt.1044(2),thec0mmis-
sionershall,inappropriatecases,auth~ thepaymentofcreditors
listed,jjhereinfrom,thefundsfirstcollected;
(2)Anyquestionofcontestationofapreferenceshallbedecidedbythe
court.
Section4.Rightsofmortgageesandcreditorssecuredbyimmovables
Art.1065.-Salepriceofimmovablesdistributedbeforethatofmovables.
Wherethedistributionoftheproceedsofsaleofimmovablestakesplace
beforeoratthesametimeasthatofthep.roceedsofsaleofmovables,
preferredorsecuredcreditorsnotfullypaidoutoftheproceedsofsale
oflJiheimmovablesshall(providedtheirdebtswereadmittedtoproofin
accordancewivhtheprovisionsofArt.1041etsq.)nmkequallywitlhthe
unsecuredcreditorsfor~"'eamountsstillduetotheminrespectofIihe
I~t
residueoftheestate.
Art.1066.-Proceedsofsaleofmovablesdistributedbeforethatofimmowrbles.
Whereoneormoredistributionsoftheproceedsofsaleofmovablestakes
placebeforethedistributionoftheproceedsofsaleofimmovables,
preferredandsecuredcreditorsdulJyadmittedtoproofmayparticipate

245. fiU COMMERCIAL CODE
insuohcUstributionsinproportiontotheWiholeoftheirdebts,subject
o1ihe11WiisetoilJheapproprillltionssetforthinArt.1067.
Art.1067.-Deductionofamountscollectedfromestatenotsubjectto
security.
(1)Aftersaleofimmovablesandtihefinalestablishmentoftheorder
ofpriorityofsecuredandpreferredcreditors,creditorsentitledto
claimontheproceedsofsaleoftheimmovablesforthewholeof
theirdebtshallreceivetheirsecureddividendonlyafterdeduction
ofamountscollectedbythemfromtheestatenotsubjecttosecurity.
(2)AmountsthusdeductedshallnotremaininNIeestatesubjectto
,
securitybutshallbetransferredtotheestatenotsubjecttosecurity
totihebenefito~whichtheyshallbedistrained.
AN.1068.-Partialpaymentofsecuredcreditors.
Thefollowlingprocedureshallapplyinrespectofsecuredcreditorswho
havereceivedpartialpaymentfromthedistributionoftheproceedsof
tlhesaleofimmovables:
(a)therightsofsuchcreditorswitJhrespecttotheestatenotsubject
.
tosecurl.1lyshallbefinallysettledonthebasisoftheamounts
forW'hiohtiheyremaincreditorsafter.thedividendreceivedby
themh~theimm.ovabJes;
(b)anyresiduewlhlichtheyhavereceivedoversuchamountinthe
priordistributionshallbewithheldfromtheamouilitoftheir
secureddividendandallocatedtotheestatenotsubjectto
security.
Section5.Rightsofcreditorssecured
byamortgageonulebusiness
Art.1069.-Proceedsofsaleofbusinessdistributedbeforeproceedsofsale
ofothermovableproperty.
Wheretiheprooeec;Isofthesaleofabusinessaredistributedbeforeorto-
geliherwliththeproceedsOftihesaleofothermov,ableproperty,the
cred.itoo:ssecuredbyamortgageonthebusinesswhohavenotbeenfuHy
pd.frnm-,theproceedsof,thesaleofsuchbusinessshallranktogether
with~ creditorsrtotheextentoftheirunpaidclaim,provided
the4'claimhasbeenadmittedinaccordancewith~heprovisionsof
Art.1041et.q.
Art.1070.-ProCeedsofsaleofothermovablepropertydistributedbefore
proceedsofsaleofbusiness.
Wheretheproceedsof.thesaleofothermovablePl'OMl"tyaredistributed

246. COMMERCIAL CODE 233
beforetheproceedsofthesaleofthebusiness,securedcreditorswhose
claimhasbeenadmittedshallshaxeinthedistribwtiontodIefullextentof
theirclaim,withoutprejudicetotheprovisionsofArt.1067.
Art.1071.
-
Deductionofsumspaidfrompl'oceedsofsaleofpropertynot
subjecttosecurity.
(1)Afterabusinesshasbeensoldandthemanne.rofdistributingthepro.
ceedsofthesalehasbeenfixed,creditorswlhoseclaimisfullysecured
bythebusinessshallbepaidfromtheproceedsofthesaleofthebusi.
ness,subjeottothedeductionofsumspaidtothemfromtheproceeds
ofthesaleofpropertynotthesubjectofsecurity.
(2)Sumsdeductedundersub-art.(1)shallberepaid,totheestatenotsub.
jecttosecuritytothebenefitofwhichtheyshallbedistrained.
Art.1072.
-
Deductionofsumspaidfromproceedsofsaleofbusiness.
Thefollowingprocedureshallapplytosecuredcreditorswhohavebeen
partiallypaidfromtheproceedsofthesaleoftihebusine88:
(a)therightsofsuchcreditorsinrespectoftheunsecuredestateshallbe
finallysettledonthebasisoftheamountforwhichtheyremain
creditorsa,fterhavingsharedinthedistribwtionoftheproceedsofthe
saleofthebusmess;
(b)anyresiduewhichtheyhavereceivedinexcessofsuchamountinthe
priordistributionsihallbededUJctedfromtheamountoftheirsecured
dividendandrepaidtotheunsecuredestate.
Section6.Recovery
Art.1073.-Recoveryofnegotiableinstruments.
Negotiableinstrumentsorothersecuritieswthichhavebeenhandedtothe
debtorforpurposesofcollectionfor.,thebenefitoftheown~randwhich,
nothavingbeencollected,areinpos5C85ionofthedebtorattihetimeofad.
judicationofbankruptcymaybeclaimedbytheowner.Thesameshallap-
plytoremittancesspeciallymadebytheownertobeappropmatedtospeci-
fiedp~ents.
Art.1074.-Recoveryofgoodsindepositorhandedtoanagent.
(1)GoodsconsignedtothedebtorfordepositorforsaleonbehaHofthe
ow:nermay,Htiheyexistinkind,inwholeorinpart,berecovered
fromthedebtor.
(2)Thepriceorpartofthepriceofthesaidgoodsmayfurt'hermorebe
recovered,whereitibasnotbeenpaidincash,norsettledforvalue
given,norsetoffincurrentaccountbetweenthedebtorandthepur.
chaser.

247. 234
COMMERCIAL CODE
Art.1075.-Recoveryofgoodst.hesaleofwhichhasbeencancelledbefore
bankruptcy.
(1)Goods,thesaleofwhiohhasbeencancelledpriortoadjudica.mon
eitherbyadecisionoftlhecourtorbyoperationofthetermsofWe
contract,may,iftheyexistinkind,berecoveredfromthedebtor.
(2)Wherethecancellationofsale\hasbeenorderedorconfirmedbya
courtafteradjudication,goodsmayberecoverednotwithstanding~hat
proceedingsforrecoveryorforcancellationwerebroughtpriortoad-
judicationbytheunpaidseller.
Art.1076.-
Recoveryofmovablessoldwithownershipreserved.
Movablessoldto1Jhebankrupt!WithreservationofownerMipmaybere-
coveredwhere,beforethejudgementinbankruptcy,suchreservationhas
beenregisteredinaccordancewiththeprovisionsofArt.2387oftheCivil
Code.
Art.1077.
-
Recoveryofgoodsintransit.
(1)Possessionofgoodstransmittedtothedebtormayberecoveredwhere
suchgoodshavenotbeendeliveredtothedebtor'swarehouseorto
thatofanagententrusted!Withtheirsaleonthedebtor'sbehalf.
(2)RecoveryisnotadmissiblewherepriQrtotheirarrivalthegoodshave
beensoldwithnointentto'defraudtoatransfereeingoodfaithon
iIIh~basisofdocumentssignedbytheoonsignor.
Art.1078.-Rightofretention.
ThesellershallbeentitledtoretaingoodssoldbylWnwheresuchgoods
havenotbeendeliveredtothedebtorortheyhavenotbeenconsigned
eithertohimortoathirdpersononIh~sbehalf.
Art.1079.-Rightoftrusteestorequiredeii'lJery.
(1)InthecasescontemplatedinArt.1077and1078,thetrusteesmay,
uponauthorisationbythecom~oner, demanddeliveryofgoodsby
pa~ngtheagreedpricetotheseUer.
(2)Wherethetrusteesdonotexercisesuohrigiht,thesellerrepay,tothe
estateanyinstalmentsreceivedbyhimaswellasanyadvancesreceiv-
edfromthebankruptinrespectoffrcigihitortransportcosts,commis-
sion,insuranceorotherexpensesandtopaysuchamoun,tshimself:
Providedthatthesellermayclaimdamagesinrespectofsuchnon-
performanceofthecontract.
Art.1080.-Admissionofclaimsforrecovery.
Claimsforrecoverymaybeadmittedbythetrusteeswiththeauthorisa-
tionofthecommissioner.

248. COMMERCIAL CODE
235
Chapter6.SeJtlementoftheBankruptcy
Sec~on1.C;omposition
Art.1081.-Proposalforcomposition.
(1)Atan,ytimeaftertheexpiry
9flIheperiodoftimeprovidedinArt.
1046,thebankrupt
~
proposeacomposition,widib.'1jhecreditorsand
,submittheproposedcompositionto,1ihecommissioner.
(2)Theproposedcompositionshallspecifythepersen18jgeoHeredItpWl.
securedcreditorsandthepel'iodoftimerequiredforpayment.I~shall
showtheguaranteestocoverthepaymeDitofdebts,legalcostsandt1he
remunerationof,thetrustees.
(3)Thewinding-upissuspendedby
apr°P?Salf~acompositJion.
Art.1082.,
-ExaminationD/proposalandnotificationtocreditors.
(1)Onreceiptoftheproposalforacomposition,t!heCOl'l'UJ1issmershall.
taketheadviceofthetrusteesanddIe'creditors'comm.i,ttee.
(2)Whereheconsiderstheproposalbasment,heshallC8U8e1ihecreditors
tohenotified.
(3)Suchnotificationshallbebyregisteredletter.sentbytheregistrarof
thecourttoeachcreditor.Ifthenumberofcreditorsniakes,.such
formof"notificirti~nDnp;raotical,theoourtmay,dterihearimg1!hetrus-
teesandthepublicprosecutor,orderthepropoSalforcompositiontobe
publishedbythecommissionerm:an6WBpaperempoweredItopublish
legalnoticesandintlheofficialCommercialGazellte.
(4)Inadditiontotheproposalsmadebythebankrupt,,thenotification
shallrefertotherecommenda,tionsofthe'trusteesand1ihecreditors'
committeetogetherwillhareportoythetrusteesshowingtthestateof
thebankruptcyproceedingsandwhatihasheencompleted.
(5)Thenotificationtothecreditorsshallstateaperiodnotlessthan
twentydaysnormore,thanthirtydayswithinrwihichthedissenting
creditorsmayfilewiththeregistrytheirrefusaltoaccepttheproposed
composition.
Art.1083.
-
Creditors'vote.
(1)VotesShallherecordedintheminutessignedbythecommissioner
andtheregis~arofthecourt.
(2)Alldulyadmitted~torsihavettherigthttovote,includingthosead.
mittedprovisionallyorsubjecttoareservation.
(3)Votesofcredirtorsenjoyingspecialsecurities~ notbecountedin
respectoftheirdebtsinlIhetransactionsrelatingtothocomposition
unlesstheyforegotheirguarantees.,'J1heresu1tsofsuchrenunciation

249. 236 COMMERCIAL CODE
shallceasetohaveeffect~h~,thecompositionisnotfinalised,oris
notl1atified,orisrevokedorwidu!raIWD;
(4)Thefollowingmaynotvote:t!hedebtor'sspouse,Ihdsrelativesbycons.
anguinityoraffinitytothefourthd0greemclusive,andpartieswho
havebecomeassigneesorpurchaserswithrespectItothesepersonswith-
inlessthanoneyearbeforethe.declamtionofbankruptcy.
(5)Assignmentsofdebtsmadeaftertihedeclarationofbankruptcyjgiveno
votingrights.
Art.1084.~Approvalofcomposition.
(1)Thecompositionshallbeofnoeffectunlessitbe..approvedbytwo-
thirdsofthecreditorsrepresentingtwo-thirdsoftihedebts.Theclaims
ofcreditorswhodonottakepartinthevotingshallnotbetakeninto
accountincalculatingthemajo,r1tyunderthisArticle.
(2)Creditorswhohavenotnotifiedtheirdissentfromtheproposalsofthe
bankruptwiil:!biaJ.tJheperiodoftimeprovidedinArt.1082(5)shaHbe
deemedtobeinagreement.
(3)Nosubsequentdecisionregardingthenumber.ofcreditorsorthe
amountof!thedebtsihasanyeffectonrtheapp~ovalofthecomposition.
(4)Theprovisionso:fArt.1083(1)shallapplytotihdsArticle.
Art.1085.-Applicationtosetasidecomposition.
(1)AllcreditorswIwwereentitled,toavoteorw/hohavebeenacceptedas
creditorssubsequentlymayapplytosetasidethecomposition.
(2)SuclhapplicationtobeofeffectshallbesenttogetherWirththereasons
therefortothedebtorandtrusteeswi1hineightdarsafterthevote
andshall&ummonthemtoappearatthenexthearing.
Am.1086.-Confirmationbythecourt.
(1)Applicationfortheconfirmationbythecourtmayhemadebyanyin-
terestedparty.Thecourtmaygivenodecisionthereonbeforetheex-
piryof1!heperiodofeigihtdaysprovidedinArt.1085.
(2)Wlhiereanapplicationtosetasidehasbeenmadeduringthisperiod,
thecou,rtshalldecideuponboththeapplicationtosetasideandthe
applicationforconfirmationattheslllJilletimeand~baUdeliverone
judgement.
(3)Beforedeliveringjudgement,thecourtshallconsider:
(a)thereportoft1hecommissionerand\hisrecommendationsonthe
proposedcomposition;
(b)thereportoftihetrusteesprovidedinArt.1082(40);

250. COMMERCIAL CODE
237
(c)theobservations,ifany,ofpartiesjointlyandseverallyliable
withthedebtor.
(4)W-heretheapplicaIiontoseta~;ideissustained,anordershallbemade
revokingthecompositionandsuohordershallbeeffectiveasregards
aninterestedparties.
Art.1087.
-
Refusaltoconfirmcomposition.
ThecourtshallnOtconfirmthecomposition:
(a)wheretheprovisionsoftheproceedingArticleshavenotbeencomplied
with;or
(b)whereconfirmationofthecoonp.oSitiOlliscontrarytothepuhlicinterest
01'theinterestsofthecreditors.
Art.1088.
-
Supervisingcarryingoutofcomposition.
(1)Afterconfil'matiol1,thecommissioner,thetruste1JSandthecreditors'
committeeshallensurethecarryingoutofthecomposition,inacoord.
ancewiththedetailedinstructionscontainedinthejudgementconfir.
mingcomposition.
(2)Thecreditors'committeemaycausethemortgagesontheestatetobe
struckoutwlhenthetermsofthecomposition'havebeencompleted.
Art.1089.
-
Resultsofcomposition.
(1)
ConfirmationofthecompositionshallbebindingonallcrecHtorsother
ithanthoseholdingsecurityinremwhiehtheyhavenotrelinquished
andunsecuredcreditorsw1hoseclaimsihavearisenduringthebank.
ruptcyproceedings.
(2)Confirmationslhallnotaffectthecreditors'mortgageonthedebtor'sim.
movablepropel'tyregisteredinthenameoftheestateunderArt.1006
andtlhemortgageregiSiteredonthebusinessinthenameoftheestate
underArt.1007,unlessrIIhecompositionotIherwiseprovides.To,this
effectthetrustees1iliallregisterthejudgementconfirmingthecomposi.
tionwihthecompetentauthority.
(3)Thecompositionshallnotaffectthecreditors'rightsinrespectofper.
sonsjointlyandseverallyIiablewiththedebtor.
Art.1090.
-
Suspension
ofeffectsofbankruptcy.
(1)
Af-terconfirmationtheeffectsofthebankruptcyshallbesuspended,
subjecttotheprovisionsofArt.1022and1088.
(2)Thetrnsteesshallhandtothedebtorafinalaccountafterithasbeen
discnssedandfinalisedinthepresenceofthecommissionerandthe
creditors'committee.T-heyshallOOndtothedebtorallthishooks,

251. 238 COMMERCIAL CODE
papersandproperty,furWlhichthedebtorshallgivearecliept.
The,trusteesshallceasetoheliableaftertwoyearsfromthefirnilising
of<theaccoun1:wtherethedebtorhasfailed,totakepossissionofhis
books,papersandproperty.
(3)Whentheprovisionsof1lhi.sArticlehavebeencompliedIWiththecom.
missionershallcauseareport,tohedrawnup,.Wherethereis8II1Ydis.
~sreementasroitscontents,themattershallbereferredtothecourt
fordecision.
Atr.1091.
-
Settingasideofcompositionafterconfirmation.
(1)NoproceedillgstosetasideacompositionW1hichhasbeenconfirmed,
exceptongroundsoffraud,foundedeitheronaconcealmentofassets
oranoversta!Jementofliiabilit,ies,maybeinst.iJtutedbyaIlIYcreditor
afterfive'Yearsfromthediscoveryofthefraud.
(2)Whererthedebtorisconvictedof1iheoffenceo£fraudulentbankruptcy,
thecompositionshallberevokedandalJ.sureties,otiherthanthosein-
volvedinthefraud,shallbedisdharged.
Art.1092.-Provisionalmeasuresonprosecutionforfraudulentbankruptcy.
(1)Wherethedebtorisprosecutedforfraudulentbankruptcyafterconfir-
mationofthecomposition,thecourtmaymakesuchprovisionalorders
asappeartobenecessary.
(2)Theseordersshallceasetobeofeffectwhereanolleprosequiisenter-
edor1II1edebtorisdisdhJaa.ged.
Art.1093.-Cancellationofcomposition.
(1)Wh~ thedebtorfailstocarryoutthetermsofthecompositiOlll,an
applicationmayhemadeItothecourttosetasidethecomposition,the
guarantors,jfany,bavingbeendulysummonedtobepresentatthe
hearingoft!heapp1ication.
(2)Wherethecompositionissata5ide,tihesuretiesshallnotbedischarge-
ed.
Art.1094.
-
Re-openingofbankruptcyproceedingsaftersettingasideofcom.
position.
(1)Wiherethecompositionissetaside,thetrusteesshallpreparewithout
de1ayafreshinventoryofassetsandpapersonthebasisof,theformer
inventoryand,ifnecessary,consulttheauthoritywhoaffixedtheseals.
Theyshallprepare,ifnecessary,supplementaryinventoriesandbalan-
cesheets.
i

252. COMMERCIAL CODE
239
(2)TheyshallpublishanoticeCOilitainingtheoperativepartofthe
judgmentandarequestforne,wcreditorstoprovetheirclaimsunder
theconditionssetforllhinArt.1043.
Art.1095.
-
Verificationofnewdebts.
(1)ThetrusteesshallverifytheproofsofdehtsunderArt.1094.
(2)T:hereshallnothefurtherverificationofdebtsadmittedtop.roof
earlier,!withoutprejudiceto:therefusalorreductionofthosepaid
inwholeorinpartinthemean1Jme.
Art.1096.
-
Actsofdebtorsubsequenttoconfirmationofcomposition.
Actsofthedelbtorhetweenthedateoftheconfh-mationofthecomposi.
tionandthesettingasideofthecompositionmayonlyheinvalidated
wheretherehasheenfMudonthecreditors.
Art.1097.
-
Rightsofcreditorspriortocomposition.
Creditorspriortocomposition~Ih!allherestoredtotheiroriginalrights
inrespectofthedehtorandof,theestate:
(a)forthewholeoftheirdehtswlheretheyhavereceivednopartofthe
di,idend;or
(b)forthatpartofthedebtw'h~chremainstohepaidwheretheyhave
receivedpartof~hedividend.
Art.1098.
-
Openingofsecondbankr.uptcyproceedings.
Wheresecondbankruptcyproceedingsareopenedatthem.staneeofnew
creditorswihodidnotshareinacompositionwhichhasnotbeenset
asideorcancelled,thecreditorsinthefirstbankruptcyshallhecreditors
inthesecondhankruptcyproceedingswithoutpreferentialrightsover
newcreditorsandshallbesubjectto1IheprovisionsofAm.1097.
Art.1099.
-
Compositionbyway
ofsurrenderofassets.
(1)Whereacompositioninvolvingtotalorpartialsurrenderofassetsis
approved,theprocedurerelatingtoordinarycompositiOiIlSshallapply
includirgl1heordinaryprovisionsrelatingtotheeffectsandsetting
asideofcompositions.
(2)SurrenderedassetsshallheliquidatedasprovidedinArtllOletsq.
(3)Acompositionbywayofsurrenderofassetsshallnotaffectany
propertynotincludedinthecompositionandany
W'°pertysub-
sequentlyacquired.
(4)TihecompositionshallnOtaffecttherightsofcreditorsinrespectof
personsjointlyandseverallyliahlewiththedebtor.

253. 240 COMMERCIAL CODE
Art.HOO.-Entryincommercialregister.
Theregistrarshallensurethatanyjudgmentconfirming,settingasideor
cancellingacompositionbeenteredrnthecommercialregisterinaccor-
dancewith~heprovisionsofArt.983(4).
Section2.Compulsorywinding-up
Art.HOl.
-
Refusaltoapprovecomposition.
WhereacompositionisnotapprovedunderArt.1084,thebankruptcy
&hallcontinueuntilcompulsorywinding-upandcompletedistributionof
theassetstothecreditorsentitled.
Art.H02.
-
Assistancetodebtor.
Wherethecreditors'committeeagrees!thatassistancebegiventothe
debtorandhisfamilyfromthebankruptestate,thecommissionershall
fixt\heamountofassistancetobegiveninaccordancewiththeproposals
ofthetrustees.
Art.HOO.-Saleofassets.
(1)ThetrusteesSIhallsellthedebtor'smovableandimmovableproperty
inaccordancewithtlheCodeofCivilProcedurewithoutrequircingthe
presenceofthedebtor.
(2)TheproceedsofthesaleshaIlbedepositedrnaccordancewith
Art.996.
(3)T,hetrusteesmaycom~omiseandarbitrateunderAl't.1038without
requiringthepresenceofthedebtor.
Art.H04.-Saleofimmovables.
Wherenoproceedingsforexpropriationofimmovableshavetakenplace
before,theopeningof~hewinding-up,only!thetrusteesshallproceedto
seIlwithrnoneweek,withthepermissionofthecommission!¥,.
Art.HOS.
-
Saleofbankruptperson'sbusiness.
.
Wherenoproceedingsforexpropriationofimmovablesrhavetakenplace
beforetheopen!ingofthewinding-up,onlythetrusteesshallproceedto
sellwiththepermissionofrtlhecommissionerandsubjectto,theprovisions
ofArt.1106.
Art.H06.-B.usinesscarriedonduringwinding-up.
(1)T,heunsecuredcreditorsmayauthorisethe,trusteestocontinuebusiness
operationsduringthewindrng-up.
(2)T,hecommissionerShallconsu1teachcreditorbyregisteredletteron
therequestofthecreditors'committee.TheprovisionsofArt.1082
(3)shallapplyinappropriatecases.

254. COMMERCIAL CODE 241
(3)Creditorsshallbenotifiedthatwithinfifteendaystlooyshallsubmit
theirvotetothecourtregistry.
(4)Theresolutionofthecreditorsshallspecifythedurationandscope
ofthepowersofthetrusteesandtheamounttoberetainedbythem
forcostsandexpenses.Theresolutionshallbeapprovedbythree-
quartersofthccreditorsrepresenting~hree-quartersofthcdebts
andconfirmedbyorderofthecommissioner.
Art.1107.
-
Lumpsaleofassets.
(1)Ontherecommendahionofthecommissi{)ller,thecourtmayauthorise
thetrusteestodisfKJseoftheassets,movableorimmovable,bylump
sale.
(2)Suohauthorisationmaybegrantedontherequestofthecreditors'
committeeorofthedebtor.
(3)ThecreditorsshallbeconsultedasprovidedinArt.1106(2)and!!he
resolutionapprovedasprovidedinArt.1106(4).
(4)Thetermsofthesaleshallbeconfirmedbythecourt.
(5)Whercthesaleisapproved,thedebtorshallbedischargedofhis
liabilitiestothecreditors.
Art.1108.
-
Dealingsinvolvingliabilitiesinexcessoftheassets.
Wheredealingsbythetrusteesinvolveliabilitiesinexcessoftheassets
inthewinding-up,creditorswhoapprovedsuchdealingsshallbeper-
sonallyliahlebeyondtheirshareintheassetswi1lhinthelimitsofthe
authorisationgivenbythem,andinproportiontotheirdebts.
Art.1109.
-
Schemeofdistri.bution.
(1)AftertheexpiryoftheperiodspecifiedinArt.1046,thetrustees
shallsendtothecommissionereverytwomon~hsareportonthe
stateofthebankruptcyandaninventoryoftheamountsdeposited
underArt.996.
(2)TheyshallsubmittotlhecommissionertheirprOfKJsalsfordistribution.
(3)Ontherecommendationofthecreditors'committee,thecommis-
sionershallmakesuchchangesintheprofKJsalsashe'hinksfitand
shallordert:hedepositoftheamendedproposalsintheregistry.He
shallcausethecreditorstobeinformedofsuchdeposit.
(4)Withintendaysthecreditorsmaysuhmittheircommentsthereon.
Thecommissioner,takingintoaccountanyohservationsofthe
creditors,shallfixtheamounttobedistributed.

255. 242 COMMERCIAL CODE
Art.1110.
-
Distributionofproceedsofwinding-up.
Mterthededu(Jtionof:
(a)OOglSandexpenses;
(b)sumsapplied,forthesupportofthedebtororhisfamily;and
(e)sumspaid,toprefe,rredcreditors,
thenetproceedsofthewinding-upshallhedistributedtoallthecreditors
inproportiontotheil'debtsprovedandadmitted,sphjecttotheprovisions
ofArt.1065,1066and1063.
Art.1111
-
Settingasideofsharecorrespondingtocontesteddebts.
Asharecorrespondingtothosedebtsontheadmissionofwhichafinal
decisionhasnotbeentakenshallbesetasideasareserve.
Art.1112.
-
Methodofpayment.
(1)Thetrusteesshallsendtoeachcreditorentitledtoadividenda
chequetohisorder,drawnonthedistributionaccountopenedinthe
nameofrhebankruptcyunderthep.rov1isionsofArt.996.
(2)Anoteofuheamountpaidshallhemadeontheproofofdebt.Where
1ilieproofofdebtcannotheproduced,thecommissionermayautho-
:cisepaymentonsightoftheminuteofdepositoftheinventoryof
debt~.
Chapter7.BankruptcyProceedingsclosed
Art.1113.-Groundsforclosingbanckruptcyproceedings.
SubjecttotheprovisionsofArt.1081-1100,bankruptcyproceedingsare
closed:
(a)bythefinaldistributionoftheProductofthew1inding-up:
(h)byreasonofinsufficiencyofassets;
(c)byreasonofabsenceofanyclaimagainsttheestate.
Art.1114.
-
Closurebyreasonofinsufficiencyofassets.
(1)WhereatanytimeuhebankruptcyproceedingscannotcDntinue
owingtoinsufficiencyofasset3,thecourtmayona:wporthythe
commissionerorof~tsownmotionorderrtheclosureoftheproceed-
ings.
(2)11hejudgmenthastheeffectofrestoringtoeachcreditortheexercise
ofhispersonalrights.
(3)Thebankruptshallremaindispossessedoftlheadmilllisrtrllltionand
distributionofhispropertyandanynewdebtscontractedbyIh:im
maynothesetupagainsttheestateinwhichnofurthercreditors
mayprove.

256. COMMERCIAL CODE
243
Art.IllS.
-
Revocationofclosureordergivenbyreasonofinsufficiency
of
assets.
(1)Thedebtororanyotherinterestedpartymayatanytimeapplytothe
courtforsettingasidetheorderuponshowingthattiherearesufficient
fundstomeettheoostsoftheproceedings,orupondepositingWlith
thetrusteesasufficientamounttomeettheoosts.
(2)HeSihallfirstpay
1Ih'ecostsarisingfromproceedingsunderArt.IIl4.
Art.IlI6.
-
Proofsnotclaimedbycreditors.
Tiheliabilityoftrusteestohandbackproofsshallbebarredafterfiveyears
fromtheadjudicationofbankruptcy.
Art.1117.-Olosurebyreasonofabsenceofclaimagainsttheestate..
(1)A£terthedepositoftheinventoryofd!Obtsspecified,inArt.1044,the
courtmayontheapplicationofthedehtororderthebankruptcypro-
ceedings,tobeclosed,wherethedebtorprovesthaitihehaspaidallthe
creditorswihohaveprovedorthathehasdeposited'Withthetrustees
anamountnecessarytopayallthecreditors!havingprovedandall
costsincludingthefeesofthetrustees.11hecourtshallmakeitsdeci.
sionuponareporthythecommissionerslhowingthaltthedebtorhas
satisfied,theahove-unentionedrequirements.
(2)11hejudgementJllastheeffectofhringingthebankruptcyproceedmgs
toanendandofrestoringthedebtorstohisfullrights.
Art.1118.-Entryincommercialregister.
11heregistrarshallensurethatainyjudgementclosinghankruptcyproceed-
ingshyreasonofinsuffioieneyofassetsorofabsenceofanyclaimagainst
theestateheenteredinthecommercialregisterinaccordance.withthepro-
visionsofAm.983(4).
TITLEIII.SCHEMES OFARRANGEMENT
Art.1119.
-
Applicationforschemeofarrangement.
Anytraderwhohasoris31><>:'LLOsuspendpaymentsandhasnotheendec-
laredbankruptmayapplytothecourtfortiheopeyingofaschemeofar-
rangement,inaccordancewitihti)1eprovisiomofthisTiNe.
Art.1120.
-
Admissibilityofapplication.
(1)Theapplicationshallnotheconsideredunlessitisp,reparedinthe
formofadeclarationwhichshallhedepcsirtedintJhecourtregistry.
(2)T,hedebtorshallfile,thedocumentsspecifiedinArt.973togetJIerwith
areportgivingthereasonsforhissuspen5,ionorimpendingsuspension
ofpayments,andthereasonsforhisproposingaschemeofarrange-
ment.

257. 244
COMMERCIAL CODE
(3)Tohedebtorshallalsoshow:
(a)that'hehasbeenregisteredwWththecommercialregi&tryfromthe
openingofhisbusinessorfornotlessthantwoYelm1;
(b).tbrtduringvhisperiodhebaskeptproperaccounts;
(c)thathehasnotbeenadjudicatedbankruptnormadeascihemeof
¥rangementwithintheprecedmgfiveyears;
(d)thathehasnotbeenconvWtedofoffencesunderArt.680.688of
thePenalCode.
Art.1121.-Proposalsrontainedinapplication.
(1)TheapplicationshiallcontainthefoUawingrequiremenlts:
(a)anundemUdngtopaynotlesscl1an50%ofthecapHalvalueof
unsecureddebts~11hinoneyearfromvhedateofconfirmationof
thesdheme,or75%withinaperiodofeighteenmoIllbhsor100%
withinaperiodofw,eeyears;
(b)apromisetofurnishmaterialor~rsonalguaranteestosecurethe
undertmngsmadeunderparagraph(a)andgivingdetailsof
theguarantees.
(2)Thedebtormayproposetoassigntohiscremitorsallassetsheldby
himatthedateofrtheapplica,liionforaschemeofarrangementWhere
!theassetsaresufficient,tomeetpaymentsasprovidedinsub.art.(1).
Art.1122.-Refusaltoconsiderapplication.
Afterhearilngthepublicprosecutor,thecourtmayrefusetheapplication
wibmeanyoftheconditionslaiddowninArt.H2Oisnotpresent.
Art.1123.-Additwnalreasansforrefusingtoconsiderapplication.
(1)Thecourtmayrefusetheapplication,notwithstandingthatitis
madeinpro~rform,Wlhereitisofopinionthatthedebtorisnotin
apositiontocomplywiththeundertakingrequiredunderArt.1121.
(2)Thecourtshallrefuse,theapplicationwherethedebtorhasabscon.
dedclosingMsplaceofbusiness,orhasmisappropriatedorfraudu.
I
lentlyreducedthevalueofpartofhisestate.
(3)WherertheapplicationisrefusedunderArt.1122orunderthisArticle,
thecourtshallmakeanorderforadjudicationofthebankruptcy
wherethedebtorhassusp.ended!hispayments.
Art.1124.-Applicationtosetaside.
(1)Noapplicationshall.bemadetosetasidejudgmentsgivenunder
Art.1122andArt.1123(1)and(2).
(2)AnapplieationtosetasideanorderunderArt.1123(3)maybe
entertainedinaccordancewillhtherelevantprovisionsofArt.984.988.

258. COMMERCIAL CODE
245
Alii:.1125.-Judgmentopeningproceedingsunderschemeofarranpment.
(1)Wherethecourtconsiders,thattherearemeritsintheappJ.ication,
itshaUorderrlteschemeofammgemeDttobeopenedandnoappli.
cationtosetasidesuchanordershallbemade.
(2)In.thedecisionon,theapplication,1hecourtshaH;
(a)appointadelegatejudgeandacommissionerinaccordance'With
Art.994(1),(4)and(5);
(b)orderthecallingoftdrecreditors'meetingwithinnotmarethan
.thirtydays£romrltejudgmentanddeterminetheperiod!Within
'Whichthejudgimentshallbepublishedandnotifiedtothe
creditors;
(c)determineaperiodoftimenotexceedingeightdayswithinwhidt.
thedebtorshallcompletet!hellis!ofhiscreditorswhere,1Ihedebtor
hasgivenreasonsinh[sapplicationfornothaV'ingsubmitted
suohlist;
(d)fixaperiodoftimenot
debtorshalldepositin
tocoVer~hecosts.
(3)Wherethedehtorfailstocomplywiththeprovisionsofpal'8@1'aphs
(c)and(d),theprovisionofArt.1123(3)shallapply.
Art.1126.-Ordersofdelegatejudge.
AnyinterestedpartymayapplytoSetasideordersofthedelegatejudge
inaccordancewithArt.992.
exceedingeightdayswithinwhichdIe
tihecourtregistTyanamountsufficient
Art.1127.
-Commissioner.
TheprovisionsofArt.997-1001shallapplytot!heco~()ner carrying
outaschemeofarrangement.
Art.1128.-Publicationofjudgment.
(1)Thejudgmentshallbepublishedbytheregistrarbymeansofnotices
postedattheell/tranceofthe;;~tandbyanieXitrac.tpublishedina
newspaperempoweredtopublishlegalnotices.!
(2)11heregistrarshallensuretihntthejudgment
'beenteredinthecom.
mercialregisterinaccordanceIW!iI1htheprovisionsofArt.983(4.).
(3)T,hedelegatejudgeandt1heregistrarshallenterandsignanoteof
thejudgmentattheendoftfheentries!inthedebtor'sbooks,andthe
booksshallbehandedbacktothedebtor.
Art.1129.-Noticetocreditors.
(1)T,hedelegllitejudgeshallfixtheplaceandtimeforthecreditors'
meeting.

259. 246 COMMERCIAL CODE
(2)Withintheperiodoftimefixed'hythecourtunderArt.1125(2)
(h),theregistrarshallsendtoeachcreditor,hyregisteredletteror
cableas'appropriate,anoticecontaining:
(a)thenamesofthedehtor,thedelegatejudgeandthecommissioner;
(h)thedateofthejudgmentcallingthecredllitorsandtheplace,date
andtimeof,themeeting;and
(c)asummaryofthep,roposalsofthedebtor.
Art.1130.-Documentaryevidence.
Documentaryevidenceshowingthatthepublicationsrequiredhavebeen
madeandthatnoticehasbeengiventothecreditorsshallbeinsertedin
theapplicatillnfileoftheproceedings.
Art.1131.
-
Effectofapplicationforschemeofarrangement.
(1)Aftertheapplicationhasbeenmadeanduntilfinalconfirmation
of1ihesoheme,nocreditorholdingaclaimarisingpriortojudgment
maydistrain,acquireaprl"ferredrightoverthedebtor'spropertyor
registeramortgage.
(2)Prescriptions,p,ert":'ilpt:onsandforfeituresshallhesm,pended.
(3)Unsecureddebtsenjoyimgnopreferredrightsshallhedeemedtobe
duebutinterestshallhesuspendedasregardsthecreditors.
(4)Amountsdueinrespectoftaxesarenotsubjecttothep,rovisionsof
thisAl'ticle.
Art.1132.-Administrationofdebtor'sproperty.
During,thecourseofproceedingsunderaschemeofarrangement,the
debtorshallretaintheadministrationofhispropertyandthemanage-
mentofhishusinessunderthesupe1'visionoftheoommrssionerandthe
guidanceofthedelegatejudge.Thecommissionerandjudgemayatany
timeinspectthebooksandaccounts.
Art.1113>3.-Actsofdebtornottoaffectcreditors.
~l)
GiftsandothergratuitousactsoractsbyWill)'of
t1hedebtorduringthep;roceedingsshallnothe
creditors.
(2)Actsbywlhiobthedebtorhascontractedloans,evenbyhillofex-
change,orcompromisedorarbitrated,oragreedtoassignmentsnot
fallingwithintheexerciseofthehusiness,ortomortgagesorthe
settingupofpledges,wi,thoutthewrittenapprovalofthedelegate
judge,'WIhoshallnotgiveapprovalunlesstl1enecessity!isclear,shall
nothesetupagainstthecreditors.
guaranteedoneby
setup,against,the

260. COMMERCIAL CODE 247
Art.113'1.-Adjudicationbankruptcyd.uringproceedingsunderschemeof
arrangement.
Wherethedebtorfailstocomplywiththeprovisionsof~t.1132and
1133,orheisshowntohaveconcealedpartofhisassets,fraudulentlyomit-
tedccrtaincreditors,increasedh!isliabilitiesorcommiuedfraudulentacts,
thedelega'tejudgeshallrefertlhematter,totheCOUl"tontherecommenda-
tionofthecommissionerandthecourtshaHadjudgethedebtorbankrupt,
withoutprejudicctoAuchcriminalpenaltiesasmaybeappropriate.
Art.1135.
-
Dutiesofcommissioner.
Theeonmlissionershallprepareaninventoryofthedebtor'sestate.Heshiall
checkthelistofcreditorsanddebtorsandprepareadetailedreportonthe
affairsandconductofthedebtor,ontheproposedschemeandtheguaran-
teesofferedtocreditors.Suchreportshallbedepositedintheregistrynot
lessthanfivcdaysbeforetlhecreditors'meetingconvenes.
Art.1136.
-
Creditors'meeting.
(l)Thedelegatejudgeshallpresideatcreditors'meetings.
(
2)Anycredit~rmayberepresentedbyanattorneyappoimedbyamentry
madeonthenoticecallingthecreditortothemeeting.
(3)Thedebtororhisattorneyshallappearinperson.Thedehtormaybe
representedbyaspe~ialagent'W1hereitisprovedtothedelegatejudge
thathecannotbepresent.
(4)Afterthecommissioner'sreporthasbeenread,thedebtorshallsubmit
hisfinalproposals.
Art.1137.
-
Considerationofproposalsforscheme.
(1)Anycreditormaygivereasonsfornotacceptingtheschemeanddis-
cusstheconcurrenceofdebts.
(2)Thedebtormayreplyanddiscussthedebts.Heshallgivesuobinfor-
mationasmayberequired.
(3)ThediscussionshallbesummarilyrecordedintheminutesandtJhe
documents,ifany,shallbeannexed,thereto.
Art.1138.
-
Extensionofmeeting.
Wherethebusinessofthemeetingcannothefinishedonthedayfixed,it
shallbeadjournedtothenextworkingdaywithoutfurthernoticetocredi-
tors,eventhoughnotpresentatthemeeting.

261. 248 COMMERCIAL CODE
Art.1139.
-
Provisionaladmissionofdebtsindispute.
(1)Thedelegatejudgemaygrantprovisio~aladmissionofdebtsindispu-
teinwholeorinpart,forthepurposeofvotingandcalculationofthe
majority,butsuchadmissionshallnotaffectthefinaldeei,iononthe
standingofsuohdebts.
(2)Creditorswhohavenotbeenadmittedmay,atthetimeofconfirma-
tionofthesdheme,appealagainstvheirnothavingbeenadmitted,
wherethemajoritywouldhavebeendifferent,hadtheybeenadmit-
ted.
Art.1140.
-
Majorityrequiredforapprovalofscheme.
(1)Thesehemcofarrangementshallbeapprovedbyamajorityofcredi-
torsrepresbntingnotlessthantwo-thirdsofallnon-preferredorun-
secureddebts.
(2)Securedcreditorsmaynotvote,unlesstheygiveuptheirsecurity.Suoh
surrendermaybepartialbutshallnothelessthanone-thirdofthefull
valueofthedebt.
(3)Whereasecuredcreditorhasvotedwithouthavingmadeapartialsur-
renderundersub-art.(2),heshallbedeemedto,havemadeafull
surrenderwhereheacceptsthesohemeunderArt.1141.
(4)Thecourt,whenconfirmingthescheme,~halltakeintoaccountthe
increaseinthedebtor'sassetswhichhasoccurredundersub-art.(2)
and(3).
(5)Whereaschemeisnotcompletedorconfirmedorisset.:::::!::orcan-
celled,thesurrenderofasecur";.evcntlhoughpartial,shallceaseto
haveeffect.
(6)TheprovisionsofArt.1083(4)and(5)shallapplytovotingunder
thisArticle.
Art.1141.
-
Acceptanceofscheme.
(1)Thenamesofthecreditors,thevalueoftheirdebtsandthewayeach
ofthemvotedshallberecoveredintheminutesofthemeeting,which
shallbesignedbythedelegatejudge,thecommissionerandtheregis.
trar.
(2)Creditorsnotify;"gtheiracceptanceofthesdhemebycableorletter
withintendaysaftertheminuteshavebeenpreparedshanbeentered
invhemarginoftheminutesbytheregis~arandincludedinthecal-
culationofthemajority.

262. COMMERCIAL CODE
249
Art.1142.
-
NUIl.apJilUl.a{
ufscheme.
WheretheschemcofarrangementisnotapprovedinaccordancewiuhArt.
1HOand1141,thedelegatejudgeshallwithoutdelayinformdlccourt,
whichshallofitsownmotionadjudgethedebtorbankrupJ.
Art.1143.
-
Procedureforconfirmingscheme.
T[ICdelegatejudgeshallintheminutesandbeforesuchminutesaresign.
ed,makeanoderinwritingforthepartiestoappearbeforeuhecourtwith.
inthenexttwentydayswhentheschemewillbeconfirmed.
(2)Thecommissionershalldeposithisreasonedorderintheregistrynot
lessthanuhreedaysbeforetheapplicationforconfirmationofthe
schemeisheardbythecourtandthedelegatejudgeshallsubmitare-
portatthehearing.
(3)'I1hedebtorandthecreditorsmaybeheardonthedJcaringoftheap'
plication.
Art.1144.
-Confirmationofschemebytlu!court.
(1)WhenuhecourtissatisfiedthattheprovisionsofthisTidehave
beencompliedwith,itshall:
(a)oonsidertihefinancialadvisahmtyof
tothecreditors,havingregard,to,the
tentialitiesofthefirm;and
(b)seekthemajoritiesrequiredhylaw.Tothiseffect,thecourt
shallprovisionallyestimatetheimJlO:rtanceandamountoftlhe
debtsdeclaredwithaviewtoestab1ishtingwhetherthereisa
majority,withoutprejudicetothefinaljudgmentstobe
given;and
(c)e:mminewhetherthesecuritiesofferedaresuffioienttoguarantee
theenforcementofthesclhemeand,inthecaseprovidedinArt.
1121(2),whetherthepropertyassignedbythedebtorissuffi.
oienttomeettheclaimsto~heexctentprescribedbyArt.1121
(1);and
thesdhemeWlithrespect
eXiistingac,tivitiesandpo-
(d)considcrwhetherthedehtordeservestobegrantedapprovalof
thescheme,takingintoaccountt1herew!ODBforh~failure.
(2)Thecourtshal]adjudgethedebtorbankruptwhereitdoesnotcan.
firmthescheme.
(3)Initsjudgmentconfirmingthescheme,theCOUrtshallmakean
orderfor:
(a)thedepositof,thedividenddueinrespectofdeclared.debts;
(b)theamounttobesetasidetocoverdebtsindispute;and

263. 250 COMMERCIAL CODE
(c)theprocedureforpaymentofamountsdueatsuccessiveinter.
valsunderthesc:heme,unlessthismatterisreferredtothe
delegatejudge.
Art.1145.
-
Assignmentofproperty.
Wheretheschemeprovidesforthe
underArt.1121(2)andsubjeotto
initsjudgment:
(a)appointliquidatorsandacommittee
supervisethewinding-up;and
(b)fixthedetailstherof.
assignmentoft'hedebtor'sproperty
differentstipulations,thecourtshall
ofthethreeorfivecreditorsto
Art.1146.
-
Prohibitionsasregardsdebtor.
(I)Unlessotherwiseprovidedintheschemeorinaresolutionadopted
underthisTitleandconfirmedbythecourt,thedebtorshallnot
disposeQforchargehisimmovableproperty,agreetorightsofpldge
orsetasideanypartofihtisassetsOItherwisethanasrequiredbythe
natureofhisbusiness,untilhehasfullycarriedoutindutiesunder
theBoheme.
(2)Anyactdoneinviolationoftheprovisionsofsuh.al'lt.(I)shallnot
besetupagainstcreditorspriortotheconfirmationofthescheme
ofarrangement.
Art.1147.
-
Pulilicationofjudgement.
Judgmentsconfirmingorrefusingconfirmationofasohemeshallbe
publishedinacoordance,withtherelevaI1ftprovisionsofArt.983.
Art.1148.
-
Applicationtosetasidejud;:mentconfirmingthescheme.
(1)'Dhecreditorswhodissentandanyinterestedpar,tymayapplytothe
COUNtosetasidethejudgmentconfirmingtheschemewithinfive
daysaftertheminuteshavebeenprepared.
(2)ThereasonsfortheappUcationshallbegivenandthe~pplication
notifiedtothedebtorandthecommissioner.
Art.1149.-Appealsagainstjudgmentconfirmingorrefusingtoconfirm
thescheme.
ThedebtorandthecreditorswhohavemadeanapplicationunderArt.1148
mayappealagainstth~judgmentconfirmingorrefusingtoconfirmthe
schemewithinfifteendaysfromthepublicationofthejudgment,notice
ofappealbeingservedonthedebtor,1ihecommissionerandallpartiesto
theproceedings.

264. COMMERCIAL CODE 251
Art.1150.
-
EffectofjudgmentconfirmingthesCMme.
(1)Thejudgmentconfirmingtlhesohemeofarrangementshallbindall
creditorspriortotheopeningoftheproceedingsforthesoheme,but
theirrights.againstpersonsjointlyandseverallyliablewiththe
debto:r,suretiesandassignees,sIhallnotbeaffected.
(2)SuchpersonsmaybehlOOrdonthehearingoftheapplicationfor
confirmingthesCheme.
.
Art.1151.-Supervisionofcarryingoutofscheme.
(1)l1hecarryingoutofa8Ciheme'Whichhasbeen
supervisedbytihecommissioner,inaccordance
laiddawninthejudgment.
(2)Thecommissionershallinformthedelegatejudgeofanyfactlik.ely
toprejudicethecreditors.
(3)'I1hedelegatejudgeshallpay,thecostsandfeesduetodIecommis.
sionerduringhistermofoffice,notwithstandinganyprovisiontothe
COIIItrary.
confirmedshallbe
witlhtheprocedure
Art.1152.~Settingasideofschemeofarrangement.
(1)11heprovisionsofArt.1091and1093shallapplywhereasdhenieof
arrangementissetasidebutthedutiesof.thetiusteeShlalJbecarried
outbytheCOlllIDissioner.
(2)Whereaschemeofarrangementprovidesforanassignmentofpro.
pertyunderArt.1121(2),thesohemeshannotbesetasidewherethe
proceedsoftheassignmentaresufficienttomeet50%ofthedebts.
Art.1153.-Clauseofreturntogoodfortune.
TheappliCllltionofaclauseinasoh.emeofII!I'Mngementprovidingthat
tihedebtorshallonlybediscl1argedwhereMsfortlIDeremainsbadshall
be1imited,toaperiodoIfiveyearsandtocaseswherethedebtor'sassets
exceedhisliabilitiesbynotlessthan25%.
TITLEIV.SPECIALRULESCONCERNING BANKRUPTCY
ANDSCHEMES OFARRANGEMENT WITHRESPECTTO
BUSINESSORGANISATIONS
Art.1154.
-
Applicationofgeneralprovisions.
SaveasisotIherwiseprovidedintheprecedingTitles,<I1heprovisionsof
thisTitleshalJapplytobusinessorganisations.
Art.1155.
-
Businessorganisationswhickmaybeadjudgedbankrupt.
(1)AJ:1commercialbusinessorganisations,otherthanajoitntvelliture,
maybeadjudgedbankruptorhegrantedascl1emeof/l11l'8Dgemellit.

265. 252 COMMERCIAL CODE
(2)AImEinessorganisationinliquida1ionma'ybeadjudgedbankrupt.
(3)1Ihcprovisionsof~hisArt,idcshallapplytobus~nessorganisations
whichhavebeendeclarednullandvoidbutwhichexistinfact.
Art.1156.
-
Noticeofsuspensionofpayments.
Noticeofsuspensionofpaymentsbyabusinessorganization
972shallbemadebythefirm'slegalrepresentativesand,in
afirminliquidation,bytheliquidator.
Art.1157.
-
Courthavingjurisdiction.
(I)TheEthiopiancourtinwhoseareaofjurisdictiontheheadofficeof
~hebusinessorganisationissituateshallhavejurisdictioninban-
kruptcyproceedings.
(2)Withoutprejudicetotheprovisionsofinternationalconventions,such
cow,tshallhavejurisdiotionnotwithstandingthatk headofficeis
abroadandaforeigncourthasexercisedbankruptcyjurisdiotion.
underArt.
thecaseof
Art.1158.
-
Bankruptcyofbusinessorganisationcomprisingpartnersjointly,
severallyandfullyliable.
(I)Eachpartnerinageneralpartnershipandgeneralpartnersina
limitedpartn~hipshallmaketihenotioeunderArt.1156within
twentydaysa£terthecompanyhavingsuspendedpayments.
(2)Thebankruptcyofafirmcomprisingpartnersjointly,severallyand
fullyliableshallcausethebankruptcyofsuohpartners.
Art.1159.-Institutionofliabilityproceedings.
ProceedingsunderArt.365and366ofthisCodeshallbejrntitutedby
'thetrusteewiththepermissionofthecommissioner,,tihecreditors'com-
mitteehavingbeenheard.
Art.1160.
-
Adjudicationofbankruptcyincommon.
(1)Whereasharecompanyorprivatelimitedcompanyisdeclared
bankrupt,~headjudicationmaydeclarebankruptanypersonwho
hascarriedOUtcommercialoperationson!hisawnbehalfanddisposed
ofcompanyfundsasthoug\htheywerehisawnandconcealedhis
activitiesunderthecoverofsuohcompany.
(2)Theprovisionsofsub-art.(1)shallapplytolimitedpartnerswho
havecarriedoutactsofmanagementinalimitedpartnership.
Art.1161.
-
Retiredpartnerwithjointandseverallialnlity.
(1)Onrequest,apartnerjointlyandseverallyliablemaybedeclared
bankruptwithinoneyearfollowinghisnamebeingstruckoffthe

266. COMMERCIAL CODE 253
commercialregisterW1herepaymentsweresuspendedbythepartner!lhip.
priortothestrikingoff.
(2)Where~hepartner(wasnotregistered,.hemaybedeclaredbankruptalt
anytimeafterhisretirement.
Art.1162.
-
Claimforpaymentofrontributions.
Thetrusteemayorderthemembersorpartnersofanybusinessorganisation
tocompletethepaymentoftheircontributions,mnhoutregardtotlhetime
fixedbythearticlesofassociation.
Art.1163.
-
Bankmptcyproceedingsinrespectofpartnersjointlyandseveral.
lyliable.
(1)ThecourtshallinonejudgementdeclareboththefirmandpaTtners
jointlyandseverallyliablebankruptands>haUnormallyappointonc
commissionerandtrustee.Theassetsoftlhefirmandofthepartners
shallbedealtwi~hseparatelyandtfhebankruptcyproceedingsofi\Jlre
two,keptseparate.
(2)Debtsprovedinthefirm'sbankruptcybythecreditorsof",hefirmshall
bedeemedtobeprovedineachofthepartner'sbankruptcy.
(3)11hefirm'screditorsmayparticipateinaUdistributionsuIJJtiItheyare
fullypaid,withoutprejudicetoclaimsasbetweenthevariousbankrupt
estatesregardingoverpaymentofcontributions.
(4)Personalcreditorsofthepartnersmayonlyclaimintilieestateof,liheir
debtors.
(5)Anycreditormaycontestprioritywithothercreditors.
Art.1164.
-
Proposalforcomposition.
(I)AproposalforacompostionbyabankruPtfirmshallbesignedbythe
legalrepresentativesofsuchfirm.
(.2)Inthecaseofagenemlorlimitedpal'tnership,tIleI¥'O'posalsforand
thetermsoftfh8compositionshallbeapprovedbypartnersrepresent.
inganabsolutemajorityofthecapital.
(3)Inthecaseofasharecompanyorprivatelimitedcompany,proposals
foracOlDpI)Sitionshallbeapprovedbyanextraordinary-generalmeet.
ing,unlesssuchapprovalhasbeendelegatedto.thedirentors.
Adt.1165.
-
Compostitioninrespectoffirmwithpartnersjointlyandseverally
liable.
(1)Whereafirmcomprisingpartnersjointly,severallyandfullyliable
requestsacomposition,thecreditorsmayapprovesuchcompositionin
favourofoneormorepartners.
\,

267. 25'
COMMERCIAL CODE
(2)InsUidbcaBeS,al11/hefirm'S'assetsshallremainsubject!toaOOIDpulsory
lWinding-up.Thepersonalpropertyofpartner5with'WIhomrtlhecomposi-
nonhasbeenapproved'shaJ1lbeexcludediIihme£romandtheoomposi-
tiKmsball.onilycontainanunde:rlliakingtopay8idividendonthose5e-
curiJtieswmohareO1.IJtside1Jhefirm'sassets.
(3)WihJereaco:IIIip06ition1WIi<thonepI8il1tnerisapproved,iheshallbedischarg-
ed&omjointandseveralJaiabi1iJty.
TITLEV.SUMMARY PROCEDURE
Art.1166.-Termsofapplicationwhenapplied.
(1)Where1IhebakmcesheetsuhmWtedbytlhedebtororsubsequentinfor-
mailiionsnoWstlhat;tfueassetsin<thebankruptcy.donotexceedone
1!housandEJthiopiandoThlrs,orwihere1IhedividendtohedistrihutA:d
cannotexceedten'percent,thecourtmay,eitherofitsownmotionor
on1IheapplWootionofibMorediJtors,ordertihattihebankruptcyproceed-
ingssbaiH'beby/WayofBUmmaIlyprocedure.
(2)Whe,reintithecourseofsudhproceedingsitisshownti1mttheassetsin
thebankiruptcyexceedonetihousandEthiopiandollarsortlhedividend
exceedstenperCent,<thecourtshaYordertlhattheproceedingsi.nbank-
ruptcyshallcontinueunderthenormalprocedure,butsuehordershall
notafToot1!hJevaJiidi1.yofanyactlli1readydone.
(3)'I1henmmalhank,mptcyrolesshallbeappliedrw<here1Iheyareapplica-
bleto!RJfIIlII18:11yp,l'OCedure.
A:rt~1167.-Specialrulesapplicableinsummaryprocedure.
InBsUmIDlBi'yprocedu,e:
(1)sealssha1lnotbefixed;
(2)theappom1lment.ofacreditors'committeeshallbeoplioDllll;
(3)the>commissionelr!iba1ldecideondebtsindispUiteunlessanapplJi.calion
ismadetoiI!hecourt;
(4)the~1 ;onermayauthoriseBDI)"negotiations;
(5)tIhereShallbeo)1edist1ilbUJtliononly;
(6)dift'ereooesrelatingto1Ihe.trustee'saccountsandhisremunerationshall
bedecidedbytheCOJIIlIIIdssione;r.
Art.1168.-ProofQfdebts.
(1)'I1hetrusteesshaHPJeP8rethelistofcreditorson<thebasisoftheae-
OOUDts,,1Jbe'~ems'ofd1edebtorand8IIlYotherdn£ol"DliMionavail-
able.

268. COMMERCIAL CODE 255
(2)Thelist,toge!lherwitihdocumentaryevidence,shaMbesent'to1!heoom-
missionerw\hoshallascel1l:a1intheliamtitiesamdordtJil'enforcemeDit.The
listofdebtsandthedecreeshallbedep.ositedint1heregistryandshan
beopentoinspectionbyanymterestedpartiy.
(3)Withinthreedaysfromsuchdeposit,,thetrusteesh!3llimformeach
creditorbyregisteredletterofthedecisiontakenregardingh,isdebt.
(4)Withinfifteendaysfromsuchdeposit,creditorsnotadmittedmaylodge
aclaimwi~hthecommisSoioner.WiJt!hinthesameperiodof,time,.objec-
tions,withregardtocreditorshavingprovedmaybelodgedIIYotiher
creditors.
(5)ThecommissionershallfixthedateforIhearingobjectionsand,where
theycannotbesettledbyagreementheshallmakeibisfinaldecision
thereon.
Art.1169.
-
Demandsforrecovery.
Thel;rovision.sofArt.1163'13haiLlapp1y,todemandsforrecovery~drestItu.
tionofmovable~ in,tihedebtor'spossession.
Art.1170.
-
CompositiJon.
(1)Aproposalforacompositionshallbeapproved,byamajomtyyoreof
thecreditorsrepresentingam8.j01'ityofthedebts.
(2)'DhecommissionershaHapprovethecompositionIW'herethtfl'isthereo
quiredmajorityandthecompositionisacceptJable.Hesba1lenIoree1!he
compositionagainstw\m.ch,thereisnoappe8llofanykind.
BOOKVI.TRANSITORY PROVISIONS
Chapter1.Generalprovisions
Art.1171.
-
Periodsoftime.
(1)Whereperiodsoftimehaveexpiredpriortothecomingintofo~"of
t:hisCode,na,thingin,tlllisCodeshaHrevivetihen.
(2)WherevMscodeliaysdownperiodsoftimeforthedoing,of&orthe
fulfilmentofformalitiesinrespectofiWlhiJdhno~
oftime!W8le
laiddownpriortothecomingintoforceofthisCode,suohpeiUods8hUl
runfromtihecomingintoforceoft!hisCode.
(3)WihereperiodsoftimehavebeeneXitendedbythisCode,tIheprovisions
ofthisCodeshallapptlyandtheperiodM'lhicl1hasJ'IlIlp!'Wrtothecom-
ingintoforceofthisCodeshallbededucted.
(4)Wherepel'iodsoftimeibJavebeenshootemedbythisCode,t1heperiod
providedbyt1helawrepealedbyUrisCodeghaRapplyanddIeperiod
whichhasrunpriortothecoming!intoforceofI\1bisCodesbaijbede.
ducted.

269. 256 COMMERCIAL CODE
Art.1172.VemdriBh".
UnlessoIIherwJseexpresslyprovided,anylegalsitua,tioncreatedpriortothe
meotsfortihecreationofthesituationconcernedasa,relaiddowninthis
Codemodifiestheconditionsgoverningthecreationofsuchsituation.
Art.1173.
-
Legalsituationsrwtfinallycreated.
UnlessoIJberwiseexpresslyprovided,legalsituationsnotfinallycreatedon
thecomingintoforceofthisCodeshallbegovernedbysuobfurtherrequire-
mentsforthecreationof11hesituationconcernedasarelaiddowninthis
Code.
Charter2.Traders:Businesses.BusinessOrganisations
Art.1174.-CommercwlRegister.
(I)T:heprovisionsofArt.86-122ofthisCodeshallcomeintoforceon
suohadayasshallbenotifiedbyOrderpubliAhedintheNegaritGaze-
fa.
(2)
W'ooneveraprovisionof.thisCodeimposestheobLigationtomakeen.
triesintheCommercialRegister,suohentriesshallbemadeinaccord-
ancewiththepracticefollowedpriortothecomingintoforceoftblis
Code.
(3)Onthecomingintoforceof,tMsCode,theMinistryofCommerceshall
~rveoneverybusinessorganisationregisteredintheMinistryofCom-
merceaformrequiringthemtosupplytheparticularsrequiredundcr
Art.105and108of:tIhiisCodeandonreceiptofthecmnpletedform
shallentersuchparticularsintheRegister.
Art.Il7S.
-
Registerofmortgageonbusinesses.
(1)T,heprovisionsofArt.179ofthisCodeshallcomeintoforceonsuch
dayandonsuohconditionsasshallbenotifiedbyOrdcrpublishedin
theNegaritGazeta.
(2)WheneveraprovisionofrhisCodeimposestheobligationtoregistera
mortgageonabusiness,theparticularsrequiredbythisCodeshaHbe
filedintheAwrajaGuezatcourtinwhOSejurisdictionlIhcbusinesscon.
cernedissiltuate.
Art.Il76.
-OfficwlCommercwlGazette.
(I)TheofficialCommercialGazetteshallbeestablishedonsudhda}as
shallbenotifiedbyOrderpublishedintheNega,ritGazeta.
(2)WheneveraprovisionofrthisCodeimposest:heobligationtomakepuh-
lieatiQllintheofficialCommercialGazetteonly,suchpublicationshall
bemadeinanews~perentitledtopublishlegalnotices.
(3)Wheneveraprovisiono£~hiisCodeimposesliheobligationtomakepub.
licationintheofficialCommercialGazetteandinaneW5paperentitled

270. COMMERCIAL CODE 257
topublishlegalnotices,publicationmadeinsuchnewspapershallbe
sufficient.
J
Art.1177.
-
Businessorganisations.
BusinessorganisationscreatedpriortothecomingintoforceofthisCode
"h,allcomplywiththeprovisnosofthisCodewithinnotmorethansix
monthsfromitscomingintoforce.
Chapter3.Negotiableinstrumentsandbankingtransactions
Art.1178.-Principle.
Negotiableinstrumentsissuedp.riortothecomingintoforeeofvMsCorle
shallremainvalidnotwithstandingthattheydonotconformtothe
requirementsofthisCode.
Art.1179.-Protest.
WhereaprotestrequirestobedrawnupundertheprovisionsofthisCode
andthereisnocourtregistrarreadilyavailable,suchprotestshallbedrawn
upinthepresenceoftwowitnessesinthemannerprovidedbythisCodeby
anypresonhavingcapacityundertheCivilCode.
Chapter4.Bankruptcy
Art.1180.
-
Principle.
(1)Bankruptcyproceedingsopenedpriortothecomingintoforceofthis
CodeshlallcontinueinaecordancewiththeprovisionsofthisCode.
(2)Commissionersandtrusteesappointedpriortothe<:Dmingintoforceof
thisCodeshallremaininofficenotwithstandingthattheywouldnotbe
eligibleforappointmentundervhisCode.
Art.1181.
-
Actsofbankruptcy.
Aotsofbankruptcycommittedpriortothecilll1ingintoforceofthisCode
shallbedeemedtohavebeencommiuedunderthisCode.
Art.1182.
-
Certificates.
Nothingshallaffectthevalidityofcertificatesissuedwhen,
pr:""
tothecom-
ingintoforceofthisCode,bankruptcyproceedingshavebeenclosedbyrea-
sonofinsufficiencyofassets.
18*