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Articles of association

Sopharma’s Articles of Association define the corporate purpose, operations on capital and shares, the activities of the corporate bodies and the principles governing their relations.

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The articles also establish the role of shareholders and the criteria for appointing the Board of Directors and the Executive Directors

CHAPTER 1: General provisions, Headquarters, Objects of Activity

S T A T U S

Art. 1./1/ The Company shall be a separate legal entity, independent from the shareholders .
/2/ /
Amended by resolution of the GM of 02.06.2005/ The Company is a public entity within the meaning of the Public Offering of Securities Act and has be en registered at the Commission of Financial Surveillance.
/3/
The Company shall be liable to its creditors with its property. The Company shall bear no responsibility for the liabilities of the shareholders .

F I R M / C O M P A N Y N A M E /

Art. 2./1/ The name of the Company is “Sopharma” AD / Joint - stock Company / and it maybe written in the Latin alphabet.
/2/
The name, headquarters, registered office, court of registration, court registration number and the bank account shall be written in the commercial correspondence of the Company.

HEADQUARTERS AND REGISTERED OFFICE

Art. 3. /1/ The headquarters of the Company shall be in Sofia , 16, Iliensko Shose Str .
/2/
The registered office of the Company shall be at 16, Iliensko Shose Str., Sofia, Republic of Bulgaria.

T E R M

Art. 4. The existence of the Company is not limited by any term.

OBJECTS OF ACTIVITY

Art. 5. The objects of activity of the Company shall be the manufacture of drugs and products of the chemical and pharmaceutical industry, commercial activity in this country and abroad, research a ctivities in the field of phyto chemistry, chemistry and pharmacy .

CHAPTER 2: Capital increase and decrease

C A P I T A L

Art. 6. / Decision of the GM of s hareholders from 30.06.2003, of the EGM of s hareholders from 29.09.2006 , of the EGM of shareholders from 09 .0 1 .2015 and of the GM of shareholder s from 10.02. 2015 /.
The capital of the Company is BGN 134 797 899 / one hundred and thirty - four million, seven hundred and ninety - seven thousand, eight hundred and ninety - nine / and has been fully paid in.

CAPITAL INCREASE

Art. 7. /1/ By a resolution of the General Meeting adopted with a majority of votes as per the effective legislative requirements, the capital of the Company may be increased by means of:

A/ New shares i ssue;
B/ Increase of the nominal value of shares already issued;
C/ Transfer of bonds into shares;
D/ Issue of rights and warrants in compliance with the requirements of the law. In the event of issue of warrants or rights, each shareholder shall have the right, within a period fixed by the General Meeting, to acquire part of them in proportion to his/her capital share possessed prior to the increase.
/2/ The resolution of capital increase shall specify relevant objectives, as well as the procedure under which such increase shall be performed.
/3/ /
Cancelled by resolution of the GM dated 02.06.2005 /
Art. 8. /1/ / Amended by resolution of the GM dated 26.06.2008/ In the event of any capital increase, each shareholder shall be entitled to acquire shares from the new issue in proportion to his/her share in the capital prior to the increase. This right shall be exercised within the term fixed by the GM , but at least one month after publication in the Commercial Register of an invitation for share subscription . The invitation for share subscription shall be published upon submission of the resolution for capital increase to the Commercial Register.
/2/ Shares not subscribed as per Par.1 above, shall be offered for subscription to the shareholders who have subscribed and paid in their part of shares in the capital increase. Any shares not subscribed under this procedure either shall be offered for sale on the stock market, if the General Meeting of shareholders does not adopt a resolution under Par.3 of Art. 8.
/3/ Where new shares have not been completely subscribed, the capital shall be increased only by the value of the subscribed shares, if this is explicitly provided in the General Meeting resolution for the increase .
/4/ Any capital increase on the condition that the shares should be purchased by specifi ed persons at a fixed price and by non - monetary contributions, may take place only in the cases under Art. 113, Par. 2 of the Public Offering of Securities Act .

CAPITAL DECREASE

Art. 9. /1/ The capital of the Company may be reduced by a resolution of the General Meeting of shareholders through the procedures provided by the law .
/2/
The capital of the Company shall not be reduced below the legal minimum for joint - stock companies.
/3/ The capit al of the Company shall not be decreased by enforced invalidation of shares.
/4/ The resolution for capital decrease shall specify the relevant purpose and the procedure under which it shall be performed.

CHAPTER 3: Transfer and acquisition of Shares

S H A R E S

Art. 10. /1/ /Decision of the GM of shareholders from 30.06.2003, of the EGM of shareholders from 29.09.2006, of the EGM of shareholders from 09.01.2015 and of the GM of shareholders from 10.02. 2015 / The capital has been divided into 134 79 7 899 / one hundred and thirty - four million, seven hundred and ninety - seven thousand , eight hundred and ninety - nine/ registered, dematerialized shares with a nominal value of BGN 1/one/ each.
/2/ Shares shall be indivisible. When a share belongs to several persons they shall jointly exercise their rights over it and shall appoint their representative.
/3/ The shares of the Company shall be registered, dematerialized, freely transferable securities offered for public trade.
/4/ Each share shall give the right to one vote at the General Meeting of shareholders, the right to a dividend and to a liquidation quota proportional to the nominal value of the share.
/5/ The issue and disposal of registered, demate rialized shares shall be regulated by a document issued in conformity with the requirements of the law and certifying the rights over the shares.

TRANSFER OF SHARES

Art. 11. /1/ Amended by resolution of the GM dated 02.06.2005 / The exchange of registered dematerialized shares for bearer’s shares and the imposition of restrictions on their transfer shall be acceptable after writing - off of the Company from the Register at the Commission of Financial Surveillance.
/2/ / Amended by resolution of the GM dated 02.06.2005, amended by resolution of GM of shareholders dated 29.06.2011./
Any transactions with registered dematerialized shares of the Company shall be made on the regulated securities markets through investment intermediaries , as well as in other ways as stipulated by law.
/3/ The transfer of registered dematerialized shares issued by the Company shall become effective as of the moment of transaction registration in the Central Depository R egister certifying the rights over these shares
/4/ In all cases not settled in the preceding paragraphs, the transfer of registered dematerialized shares shall be performed in conformity with the effective legislation.

ACQUISITION OF OWN SHARES

Art.11a 11a /new, approved at AGM, 21 June 2013 / /1/ The Company may acquire in any calendar year more than 3 percent of its own shares with voting rights in the case of reduction of capital through cancellation and repurchase of shares only under the terms and conditions of tender offer under art.149b of POSA. In this case the requirements for holding at least 5 per cent and minimum size of repurchase of 1/3 of the shares with voting rights shall not apply. In these cases the Company must notify the FSC about the number of treasury shares that it intends to purchase within the limit of art. 111, par.5 of POSA, and the investment intermediary who has the order to buy. The notification must be made no later than the end of the business day preceding the day of repurchase.
/2/ The Company may carry out repurchase of own shares without a tender offer by acquiring in a calendar year not more than 3 per cent of its own shares with voting rights, both after a decision by the General Meeting of Shareholders or by the Board of Directors for a term not exceeding eighteen months from the date of the decision of the respective authority of the Company. Repurchase of own shares by a decision of the Board of Directors may be conducted without special delegation of authority from the General Meeting of Shareholders for each particular case, and entirely under the powers of the Board of Directors as per the present regulation from the Articles for a period of up to two (2) years from entering of the present Articles in the Commercial R egister by the R egistry Agency.
/3/ The decision of the Board of Directors for the repurchase of own shares shall be taken by a majority of two thirds of the Board members. The decision of the Board of Directors for repurchase shall have the following content: minimum and maximum number of shares to be repurchased; the terms and conditions under which the Board of Directors shall conduct the purchase within a specified period not exceeding eighteen months from the date of the decision; the minimum and maximum share price for repurchase, and the investment intermediary, through which the repurchase will be conducted.

CHAPTER 4: Company management, General meeting of Shareholders, Board of Directors

COMPANY MANAGEMENT

Art. 12. Management bodies of the Company shall be:
1.General Meeting of Shareholders.
2.Board of Directors.


GENERAL MEETING OF SHAREHOLDERS MEMBERSHIP

Art.13. /1/The General Meeting of shareholders shall include the shareholders with a voting right.
/2/ The  members of the Board of Directors shall participate in the General Meeting without voting rights, unless they are shareholders.

COMPETENCE

Art.14 The  General Meeting of shareholders shall have the exclusive competence to resolve on the following matters:
1.To amend and complement the Articles of Association of the Company;
2.To increase and decrease the Company capital;
3.To transform and wind up the Company;
4.To  specify the number, to elect and dismiss members of the Board of Directors and determine their remuneration;
5.To appoint and dismiss chartered accountant/s/;
6.To approve the annual financial statement after certification by the appointed chartered accountant/s/;
7.To appoint the liquidators in the event of Company winding-up  except in cases of insolvency;
8.To relieve the members of the  Board of Directors from liability afte accepting the report of its activities;
9.To resolve on the issue of bonds;
10.To distribute the profit;
11. /Amended by resolution of the GM dated 02.06.2005/ To grant the Board of Directors the power to conclude transactions under Art. 114, Par. 1 of the Public Offering of Securities Act.
12.To  resolve  on  any  other  matters  within  its  competence  granted  by  law  or  by  these Articles of Association.
 

CONVENING OF THE GENERAL MEETING

Art.15./1/ The General Meeting shall be held at least once a year.
/2/ The  regular General Meeting of the Company shall  be held by the end of  the first half of the year after the end of the accounting year. The General Meeting of shareholders shall be held at the address of its headquarters.
/3/ The  General Meeting of shareholders shall elect a Chairman, Secretary and Vote-tellers, who may not be shareholders .

SUMMONING

Art. 16. /1/ Amended  by  resolution  of  the  GM  dated 26.06.2007/ The General  Meeting shall be summoned by the Board  of  Directors. It may also be summoned at the request of shareholders who for more than 3 months have been  in  possession  of  shares repr esenting  at least 5 per cent of the capital. If within 1 month of the request of the shareholders possessing at least 5 per cent of the capital, such request has not been satisfied, or if the General Meeting is  not heldwithin 3 months following submission of the  request, the  District Court of Law shall summon the General Meeting or shall empower the shareholders who have requested the convening or their representative, to summon the Meeting.
/2/ The summoning of the General Meeting shall take  place in compliance with the  requirements of Art. 223, Pars.3, 4 and 5 of the Commercial Act and Art.115, Pars.2 and 3 of the Public Offering of Securities Act.
/3/ If losses exceed ½ of the Company capital, the General Meeting of shareholders shall be held not later than three months from establishing the losses.
Art.16а/New, adopted by resolution of the GM of shareholders dated 29.06.2011/ (1) General Meeting of shareholders may also be held by use of electronic means, by means of one or more forms provided in the Public Offering of Securities Act,
as well as by a combination of an attended meeting with any such form.
(2) Subject to observance of the requirements of the Public Offering of Securities Act, the right to vote at the General Meeting of shareholders may also be exercised before the date of the relevant meeting by correspondence, using a mail, including e-mail, courier or some other 6 manner specified in the Rules for Voting by Electronic Means and Correspondence, adopted by the Company.
(3) Notwithstanding the options provided in these Articles of Association,
The Board of Directors shall determine the procedure for holding the General Meeting of shareholders and the manner to exercise the voting right for each session of the General Meeting, and relevant information shall be given to shareholders in the invitation for summoning the General Meeting.
(4) The rules for voting by electronic means and correspondence shall be adopted by the Board of Directors and shall be published on the Company's website.

Art.16 b/ New, adopted by resolution of the GM of shareholders dated 29.06.2011/ The Company may use electronic means to submit information to shareholders, provided that the following conditions have been observed:

  1. The use of electronic means is not dependent on the headquarters or registered address of share holders or persons under Art.146, Par.1, sub-pars.1-8 of the Public Offering of Securities Act;
  2. Identification measures have been taken so that the information is submitted actually to shareholders or persons entitled to exercise a voting right or determine the exercise of such right;
  3. Shareholders or persons under Art.146, Par.1, sub-pars.1-5 of the Public Offering of Securities Act, entitled to acquire, transfer or exercise the voting right, have stated explicit written consent to submit information by electronic means or have not stated explicit refusal to give such consent within 14 days of receipt of the request of the Public company for submission of such consent. At the request of persons under the preceding sentence, the Company shall be obliged to submit the information on hard copy as well;
  4. Determination of expenses related to information submission by electronic means is not in conflict with the principle of equality underlying Art.110 b/of the Public Offering of Securities Act.


Q U O R U M


Art.17 /Amended by resolution of the GM dated 02.06.2005/The General Meeting shall be entitled to adopt resolutions if more than half of the capital is represented at its session, except where the law provides another type of quorum for certain resolutions. If there is no quorum, a new session of the GM of shareholders shall be appointed.

REPRESENTATION AND ACCOUNTABILITY


Art.18 /1/The shareholders may participate in the General Meeting personally or by an authorized representative. Several shareholders may authorize a joint representative.
/2/ /Amended by resolution of GM of shareholders dated 27.05.2009/ For  participation in the  General  Meeting, each shareholder  should  produce an identification document as
provided by law, certifying  his/her rights over the shares  possessed. The representatives of shareholders at the  General  Meeting  shall  establish their identity  by  explicit,  written power-of-attorney containing the minimum information specified by a Regulation.
/3/ The shareholders–legal entities shall be represented at the General Meeting by their representative bodies or by persons specially authorized for the session.
4/ A  list  of  participating  shareholders  or  of  their  representatives  as  well  as  of  the number  of  possessed  or  represented  shares  shall  be  prepared  for  each  session  of  the  General Meeting.  The  shareholders  or  their  representatives  shall  confirm  their  presence  by  their signatures.  The  list  shall  be  certified  by  the  Chairman  and  the  Secretary of the General Meeting.
/5/ Minutes  shall  be  kept  during  the  session  of  the  General  Meeting,  according  to  the requirements of Art.232 of the Commercial Act.
/6/ The  shareholders  are  entitled  to  get  acquainted  with  the  minutes  and  to  receive copies-excerpts thereof.
Art.18а. The  right  to  vote  at  the  General  Meeting of  shareholders shall  be  acquired  upon payment of the issue value of the share.
Art.18 b. The right to vote shall be exercised by persons who have acquired shares not later than 14 days prior to the date of the General Meeting.

CONFLICT OF INTERESTS. PROHIBITION OF EXERCISING OF VOTING RIGHTS

Art.18c./new,  approved  by  AGM,  21  June  2013/  A  shareholder  cannot  participate personally or by proxy at the voting on:
1.Bringing claims against them.
2.Taking  actions  or  denial  of  actions  related  to  the  fulfillment of  their obligations  to  the Company.
3. Taking a decision under art.114, par.1 of POSA, in the cases when they are an interested person as defined in POSA.

MAJORITY

Art.19./1// Amended by resolution of AGM, 30 June
2003; amended by EGM, 29 June 2006; amended by AGM, 21 June 2013/ The resolutions of the General Meeting under Art. 14, Pars .1,2,3 and under Par.4 concerning the number, election and dismissal  of members of the Board  of  Directors  shall  be  adopted  by  amajority  of  2/3  of  the  capital  represented  at  the General Meeting. The resolutions under Art. 14, Par. 11, in cases of acquisition or disposal of assets of the Company, shall be adopted by a majority of 3/4 of the capital represented at the General Meeting, and in all other cases – by an ordinary majority of the capital represented at the General Meeting.
The  quorum,  wherever  provided  in  these  Articles  of  Association  for  adoption  of resolutions by the General Meeting, shall be determined on the basis of capital represented at the Companys General Meeting.
/2/ Resolutions of the General Meeting shall come into force immediately unless their
effect  is  postponed.  Resolutions  under  Art.  14,  Pars.  1, 2,3  and  4,  concerning  the  number, election and dismissal of members of the Board of Directors, and Par. 7 shall be recorded in the Commercial Register and shall become effective after their entry.

BOARD OF DIRECTORS

MEMBERSHIP


Art.20 The Company shall be managed and represented by  a Board of Directors.  It shall consist of three to nine persons.
Art.21 /1/ /Amended by resolution of the GM dated 26.06.2007/ Members of the Board of Directors  may  be  physical  persons or legal entities meeting  the  requirements of Art.234 of the Commercial Act and Art.116а, Par.2 of the Public Offering of Securities Act.
/2/ If  a  member  of  the  Board  of  Directors  is  a  legal entity, it shall appoint  a representative(s) to perform its obligations at the Board. Such legal entity shall bear joint and unlimited liability t
ogether with the other Board members, in relation to obligations resulting
from the activities of its representative.
/3/ The  physical  persons,  who  represent  the  legal entities - members of the Board  of Directors, shall meet the requirements of Art. 234, Par .2  of the Commercial Act.
/4/ Members of the Board of Directors shall not be persons who have been members of a management or supervisory body of a Company  wound-up by reason of insolvency during the recent two years preceding the date of the bankru ptcy decision, if any unsatisfied creditors have remained ./5/ /new, approved by AGM, 21 June 2013/ Members of the Board of Directors shall  not  be  persons  who  have  been  members  of  a management  or supervisory  body of  a Company for whom it has been proven through a penal provision the breaching of obligations on  reaching  and  maintaining  the  prescribed  reserve  levels  under  the  Oil  and Oil  Products  Reserves Act.
Art.21a /new, approved  by AGN, 21 June 2013/  /1/ At least one third of  the members of  the Board of Directors must be independent persons.
/2/ The independent member may not  be:

  1. an employee in  the public company;
  2. a  shareholder,  who  holds  directly  or  through  related  parties  at  least  25%  of  the  votes of the General Meeting or is a person, related to the company;
  3. a person who has a long-term business relation to the public company;
  4. a  member  of  a  managing  or supervisory  body,  a  procurator  or an employee  of a company or other legal person under item 2 and 3; 5.a  person  related  to  another member of a managing  or supervisory  body of  the  public company.

/3/   Persons,   elected   as   members   of   the   Board   of   Directors,   for   whom   the circumstances  under  par.2  become  applicable  after  the  date  of  their  election  must  notify  the Board  of  Directors  immediately,  stop  exercising  their  functions  and  cease  receiving  a remuneration.
/4/  Candidates  for  elective  position  shall  prove  the  absence  of  circumstances  under  par.2 through a declaration that becomes part of the written materials for the General Meeting, the agenda of which includes the election of members of the Board of Directors. The persons mentioned in the previous sentence shall confirm the veracity of the documents submitted to the General Meeting at which their election is proposed.
/5/ In the election of the independent members of the Board of Directors the capital represented at the General Meeting shall include shares held by persons under par.2, items 1-5 only if other shareholders do not participate and are not represented at the General Meeting.

MANDATE

Art.22. /1/ The members of the Board of Directors shall be elected for a period of up to 5 (five) years.
/2/ The members of the Board of Directors may be reelected without any restrictions.

F U N C T I O N S

Art. 23. /1/ The Board of Directors shall adopt the rules governing its functions, and shall select a Chairman and Deputy Chairman among its members.
/2/ The Board of Directors shall be summoned for regular meetings at least once every three months to discuss the current state and development of the Company.
/3/ Each member of the Board of Directors may ask the Chairman to summon a meeting for  discussion  of  some  specific  matters.  In  such  cases,  the  Chairman  shall  be  obliged  to summon  a  meeting  and  to  send  notifications  within  a  week  prior  to  the  date  of  the  meeting, except if an urgent matter requires summoning of a meeting within a shorter term.
/4/ Notifications shall specify: the place, date and hour of the meeting and the proposed agenda.
/5/ No  notification  as  per  the  foregoing  paragraph  shall  be  required  if the  members  of the Board of Directors have been informed at the last meeting about the place, date, hour and agenda of next meeting.
/6/ Minutes shall be kept about the decisions taken by the Board of Directors and shall be  signed  by  all  attending  members.  The  minutes  from  the  Board  meetings  shall be  a  trade secret.  Any  facts  and  circumstances  of  such  minutes may be  published,  announced  and brought to the knowledge of third parties only by a decision of the Board of Directors.

RIGHTS AND RESPONSIBILITIES

Art. 24./1/ The   members of the Board of Directors shall have equal rights and responsibilities, irrespective of:
/A/ The internal distribution of functions between the Board members;
/B/ The  regulations  granting  management and representative powers to  the  executive members.
/2/ The Board members shall fulfill their obligations in the interest of the Company and  shall keep its secrets even after they cease to be Board members.
/3/ /Amended by AGM, 29 June 2011; amended by AGM, 21 June 2013/The members of the Board of Directors shall be entitled  to  a  remuneration, the form,  amount  and  term  of which shall be determined by decision of the General Meeting in conformity to the following principles:
A/ The   general Meeting shall determine the amount of the permanent monthly remuneration of the members of the Board of Directors;
B//amended by AGM, 21 June 2013/ In case of a positive financial result /profit/ and by  decision of  the General Meeting, the Executive  Director  is  entitled  to  receive  a  one-time bonusof up to one percentof the net profit of the Company.
C/ /amended   by   AGM, 21 June 2013 / Payment of not less than 40% of the remunerationreferred to in item B/ shall be deferred for a  period  of  time  specified  in the approved  by the General Meeting
Remuneration  Policy for members of the Board of Directors,  but  not  less than 3 years. The Company shall  determine what  portion  of  the payment to defer depending on its relative weight compared to the fixed salary under item A/.

COMPETENCE

Art.25 The Board of Directors shall:
1/Prepare  and  submit  for  approval  by  the  General  Meeting  the  annual  report  on  the activity of the Company, the annual financial statement as well as draft resolutions within the competence of the General Meeting;
2/ Approve plans and programs for the activity of the Company;
3/ Approve  the  organizational and  managerial structure, approve the rules of intra-company accounts; salaries and the other internal rules of the Company;
4/ Approve the  formation of the cash funds and  specify the procedure for their accrual and disbursement;
5/ Propose to the General Meeting any capital increase or decrease, any amendment of and/or amendments to the Articles of  Association,  changes  in  the  Board  of  Directors membership, dismissal and election of a new Board;
6/ Decide  on  winding-up  or transfer  of  undertakings or of substantial parts thereof, significant changes in the  activity of the  Company, considerable organizational changes, long-term cooperation of essential importance for the  Company as well as the  establishment of Company branches;
7/ Conclude credit agreements;
8/ Conclude  transactions  as  a  result of  which  assets  the  total  value  of  which  exceeds 50% of the balance-sheet value of Company assets, shall be transferred or granted for use to other persons only upon explicit authorization by the General Meeting.


QUORUM AND MAJORITY

Art.26. /1/ The Board of Directors may hold a meeting and adopt resolutions if at least half of its members are present in  person or represented by another member of the Board. Each attending member may represent only one absent member.
/2/ The  Board  of  Directors may adopt decisions in non-attendance if  all  its  members have confirmed in writing their approval of such decisions.
/3/ The Board of Directors shall adopt resolutions by a simple majority, unless qualified majority is required by the relevant provisions of the Commercial Act or by these Articles of Association.

QUALIFIED MAJORITY DECISIONS

Art. 26a./new, approved  by AGM, 21 June 2013/ The  following  decisions  of  the Board shall require a majority of two thirds of its members to be valid:

  1. Conclusion  of  a  single  or  series  of transactions for the acquisition and/or disposition of long - term fixed assets from and/or in favor of one person or related persons, the total cost of which exceeds 1 million EUR in a calendar year;
  2. Conclusion  of  transactions related to sale and/or other forms of disposition of participations and/or shares, and/or businesses of companies in which the Company participates;
  3. Conclusion   of   investments,   related   to   the   buying and/or acquisition of participations and/or share, and/or businesses of companies;
  4. Takeover  of  liabilities  and/or  pledging  of  assets  of  the  Company  and/or  of  part and/or  the  whole  of  its  business  and/or  securing  of  liabilities to a person or related  persons, the amount of which exceeds 1 million EUR in a calendar year;
  5. Provision  for  use  and/or  rental  to  a  person  and/or  related  parties  of  long-term fixed assets of the Company at a value exceeding 1 milli on EUR in a calendar year;
  6. Conclusion of transactions with related parties pursuant to art.114, par.2 of POSA, for which no prior authorization by the General Meeting of Shareholders is required.
  7. Election of executive members of the Board of Directors, whoshall only represent the Company jointly;
  8. Proposal  for  election  and  dismissal of  auditors of the  Company  and  approval  of the annual financial statements of the Company.
  9. Proposal for the distribution of the profit.
  10. Approval for issuing of bonds.
  11. Determining  and  change  of  the  persons  authorized  to  sign  on  behalf  of  the Company,  the  delimitation  of  the  right  of  signature,  determining  the  bonuses  for  the  staff  of the Company.
  12. Decision to authorize the Executive Director to determine the group of employees to  receive  a  bonus  amounting  to  of  2%  of the profit  of the Company for each separate financial  year.  This  decision  shall  be  taken  based  on  a  decision by the General  Meeting  of Shareholders  for  determining  the  specific  amount  of  the  bonus,  which  shall  be taken at a Meeting, at which the relevant audited annual financial statements have been approved and a positive financial result /profit/ is present.


LIABILITY AND ACCOUNTABILITY

Art.27.  /1/ The  members of the Board  of  Directors  shall  deposit  guarantees of their management to the amount determined by the  General  Meeting  of  shareholders, but not less than their gross quarterly remuneration.
/2/ Members  of  the  Board  of  Directors  shall  be  jointly  liable  for  damages  suffered  by the Company through their fault. Each member may be relieved of liability if it is established that he/she is not guilty for such damages.
/3/ The  Board  of  Directors  shall  report  on  its  activities before the General Meeting  of shareholders.
/4/ The  persons  who  possess  individually or  jointly  at  least  5%  of  the  capital  of  the public Company shall, in case of inaction of its management bodies which may jeopardize the Company  interests,  be  entitled  to bring  Company  claims  against  third  persons before  the court. The Company shall be summoned as a party to the court action. The Company shall be summoned as a party to the court action.
/5/ The persons under Par. 4 above may lodge a claim before the County Court, having jurisdiction over the Company, for  indemnification  of  substantial  damages  inflicted  to  the Company  intentionally or as a result  of gross  negligence  due  to  the  activity  or  inactivity  of management body members. Such claim shall be lodged within 14 days from establishment of damages, but not later than one year from the relevant act or the beginning of inaction, respectively.

EXECUTIVE DIRECTOR

Art.28. /1/The  Board of Directors shall elect from among its members one or more executive members – Executive   Directors,   and   shall empower them to represent the  Company. Such empow erment may be withdrawn at any time.
/2/ The executive members are obliged to inform immediately the Chairman of the Board of Directors of any events of substantial importance for the Company.
/3/ The Executive Directors shall have the right to perform any actions and make transactions related to the activity  of  the Company and not within the competence of the General Meeting and the Board of Directors,to represent the Board and to authorize third persons for the execution of certain activities.
/4/ TheExecutive Directors shall:
/A/ Organize the performance of the decisions of the Board of Directors;
/B/ Organize  the  activities of the Company, accomplish its operational management, ensure the safe-keeping and protection of its property;
/C/ Conclude the employment contracts with the Company employees and workers;
/D/ Represent the Company and execute the functions assigned to them by a legislative act or by decisions of the Board of Directors.
/E/ /new, decision by AGM, 29June 2011l; canceled byAGM, 21 June 2013/
/6/ The Chairman of the Board of Directors shall sign on behalf of the Company a contract with the Executive Directors, where their specific rights and responsibilities, their remunerations, insurances and other provisions shall be specified.

INVESTOR RELATIONS DIRECTOR


Art.28a./new, decision by AGM, 21 June 2013/ /1/ The Company shall appoint on a labor contract Investor Relations Director, who shall have appropriate qualifications and experience to carry out their duties and cannot be a member of the Board of Directors or a procurator of the Company.
/2/ The Investor Relations Director shall:

  1. Facilitate effective relationship between the Board of Directors and the Shareholders of the Company, as well as with persons who have expres sed interest in investing in the shares of the Company by providing them with information about the current financial and economic condition of the Company and any other information to which they are entitled by law in their capacity as shareholders or investors;
  2. Be responsible  for  sending within the statutory deadline the materials for the Annual General Meeting to all  shareholders who have made a requesy to acquire them, as well as presenting them on-site as specified in the invitation to the General Meeting.
  3. Take and keep accurate and complete records of the meetings of the Board of Directors of the Company.
  4. Be responsible for the timely submission of all required reports and notifications of the Company to the Financial Supervision Commission,the regula ted market on which the shares of  the Company  are  traded, the  Central  Depository  and  national dailies, listed in the prospectus for the public offering of the shares of the Company;
  5. Keep a register  of submitted documents under  items 2 and 4, as well  as  the received requests and the provided information under item 1, describing the reasons in case of failure to provide information.

/3/  The  Investor Relations Director shall report annually in front of the Annual General Meeting of Shareholders of the Company.
/4/As Investor Relations Director shall not be appointed persons who:

  1. have  been members of  a company  or cooperation  terminated due to bankruptcy in the past two years preceding the date of the declaration of bankruptcy, if unsatisfied creditors remain;
  2. as at the date of appointment have been convicted with an effective sentence for crimes against the property, of economic type or against the financial, tax or social security system, committed in the Republic of Bulgaria or abroad, unless they have been exonerated.

/5/ The Investor Relations Director shall be required to:

  1. fulfill their duties with due diligence and in a manner, in which they reasonable believe is in the interest of all Shareholders of the Company and by using only the information, about which they reasonable believe that is complete and authentic.
  2. be loyal to the Company by:

a) consider the interest of the Company before their own interest;
b) avoid  direct  or  indirect  conflicts  between  their  own  interest  and  the  interest  of  the Company,  and  if  such  conflicts  arise – to  timely  and  completely  disclose  them  in  writing before  the  Board  of  Directors  without  exercising  influence  on  the  members  of  the  Board  of Directors in taking decisions in such cases.
c) not disclose non - public information about the Company including after they cease to be Investor  Relations Director  until  the public  disclosure  of  the respective  information  by the Company.

CHAPTER 5: Annual accounts

ANNUAL CLOSING OF ACCOUNTS

Art.29. /1//Amended by resolution of the GM dated 26.06.2007/ By 31 March every year, the Board of Directors shall prepare the annual financial statement of the preceding  year and an annual report  on Company activities and shall submit them to the chartered accountant/s/, appointed  by  the  General  Meeting. The  annual  report on  the  Company  activities  shall  be prepared in accordance with the requirements of Art.247
of the Commercial Act.
/2/ The   annual   financial   statement   shall   be   audited   by   the   appointed   chartered accountant/s/with regard to its compliance with the requir ements of the Accounting Act and the  Articles  of  Association  of  the  Company.  The  annual  financial  statement  shall  not  be  approved by the General Meeting without an audit by a chartered accountant/s/.
/3/  Upon  submission  of  the  report  by  the  chartered  accountant/s/,  the  annual financial statement,  the  annual  report  on  the  activities  and  preparation  of  the  proposal  for  profit distribution, the Board of Directors shall decide on the convening of a regular annual session of the General Meeting of shareholders.
/4/ The  audited  and  approved  annual  financial  statement  shall  be  submitted  to  the Commercial Register.


DISTRIBUTION OF PROFIT

Art. 30. /1/ / Amended by resolution of the GM dated  26.06.2007/  Dividends shall be paid  out only where, according to the annual financial statement for the relevant year audited and  approved  as per Section XI of the Commercial Act, the net value of assets, depreciated with the  value  of  the  dividends  subject  to  payment,  is  not  less  than  the  sum  of  the  capital  of  the Company,  the  Reserve  Fund  and  the  other  funds  which  the  Company  is  obliged  to  form  in compliance with the law or the Articles of Association. The net value of the assets within the meaning of the foregoing sentence shall be the difference between the value of the rights and liabilities of the Company according to its balance sheet.
/2/ Payments  shall  be  made  up  to  the  sum  of  the  profit  for  the  respective  year,  the undistributed profit for previous years, the part of the Reserve Fund and the other funds of the Company which exceed the minimum determined by law or by the Articles of Association of the  Company,  depreciated  with  the  uncovered  losses  from  previous  years  and  discounts  for 14 the Reserve Fund and for the other funds that the Company is obliged to form in compliance with the requirements of the law or the Articles of Association.
/3/ By resolution of the General Meeting, a part of the profit subject to distribution may be allocated to specific target funds of the Company.
/4/ The  decision  on  the  amount,  procedure  and  method  of  payment  of  the  dividends  shall be made by General Meeting of shareholders.
/5/ All persons  who  have  acquired  shares  within  14  days  after  the  date  of  the  General Meeting at which the annual financial statement has been approved and the decision for profit distribution has been made shall have the right to receive dividends.
/6/ The Company is obliged to pay out dividends to the shareholders within 3 months from the  General  Meeting  session.  Dividends  shall  be  paid  through  a  bank  with  the assistance  of the Central Depository.

RESERVE FUND


Art.31.  /1/
The  Company  shall  form  a  Reserve  Fund  by accumulating  funds  from  the following sources:
/A/ Such part of the profit determined by General Meeting of shareholders, but not less than 10% of its total amount after taxation;
/B/ The funds acquired over the nominal value of the shares after their sale;
/C/ Other sources as per resolutions of the General Meeting.
/2/ The funds of the Reserve Fund may be used only for:
/A/ Covering the annual loss;
/B/ Covering losses from the previous year;
/C/ If the Reserve Fund exceeds 1/10 of the capital, the greater part may also be used for capital increase.
/3/ Deductions from the Reserve Fund may be discontinued when it reaches 25% of the nominal value of the capital.
/4/ Other cash funds may also be formed by a decision of the Board of Directors.

COVERING OF LOSSES

Art.32. /1/The losses in the annual balance sheet or from previous years may be covered by the Reserve Fund.
/2/ When the  actual  value  of  the  capital  falls  below  the  nominal  one,  the  General Meeting of shareholders may adopt a resolution to cover the loss by additional contributions. Such  resolution  shall  oblige  the  shareholders  who  have  voted  positively.  The  shareholders who  have  voted  against  it  may  declare  acceptance  of  the  resolution  till  the  end  of  the  same session.
/3/ The shareholders who have made additional contributions shall have the right -at the expense  of  dividends  of  shareholders  who  have  failed  to  make  additional  contributions – to receive the part of the covered loss in proportion to the shares of the latter.
/4/ If no decision  for  additional  contributions is made  in  the  case  under  Par.2,  the General Meeting shall adopt a resolution for registration of the actual value of the capital, and if the capital is below  the  minimum  permissible  amount  over  a  period of one year, the Company shall be wound up either by liquidation or by transformation into a limited liability Company in which  the  shareholders  shall acquire  equities  in  proportion  to  the  shares  they own.

CHAPTER 6: Transformation and termination of the company

TRANSFORMATION AND TERMINATION OF THE COMPANY

TRANSFORMATION OF THE COMPANY

Art.33.  /1/ The  Company  may  be  merged  into  another  Company,  to  be  split,  to  separate another  Company  from  itself  or to participate in the establishment of another Company by merger.
/2/Transformation shall be performed in conformity with the provisions of the Public Offering of Securities  Act,  the  Commercial  Act  and  the other legislative  acts governing the Company.

WINDING-UP OF THE COMPANY

Art.34. /1/The Company shall be wound-up:
/A/ By a resolution of the General Meeting of shareholders;
/B/ If declared bankrupt;
/C/ By a court decision made under prosecutor’s charges if the Company is pursuing goals forbidden by law;
/D/ When Company capital falls below the legal minimum over a period of one year. If within this period the General Meeting fails to adopt a resolution for its winding-up, then the Company shall be wound up through the procedure of item (C);
/E/ In any other cases provided by law.

LIQUIDATION

Art.35. /1/ Upon Company winding-up other than in case of insolvency, the Company shall be subject to liquidation.
/2/The  liquidators  of  the  Company  shall  be  appointed by resolution of the  General Meeting.
/3/ The  liquidators shall prepare  an  initial  balance  sheet and an explanatory report reflecting the state of the Company as at the date of the resolution for winding-up.
/4/ At  the  end of each year, the liquidators  shall  prepare an annual balance sheet  and report on their activities and shall submit them to the General Meeting for adoption.
/5/After property cash-in and satisfying of creditors, the remainder shall be distributed among the shareholders in proportion to the shares owned by them and according to the distribution principle approved by the General Meeting.

CHAPTER 7: Additional provisions

ADDITIONAL PROVISIONS 

Art. 36 /1/ The provisions of the Commercial Act, the Public Offering of Securities Act and the legislation effective in the Republic of Bulgaria shall be applied to all matters not treated in these Articles of Association.
/2/ Upon legislative changes, the next General Meeting of shareholders shall adopt a resolution for amendment of the Articles of Association in order to bring their provisions in compliance with to effective legislative regulations. Till the adoption of such resolution, the relevant texts of the Articles of Association shall be interpreted in conformity with the Constitution and the laws of this country.
/3/ Any changes in the effective legislation which cancel or alter imperative provisions of these Articles of Association shall not lead to the invalidity of the Articles of Association as a whole.